BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The principal, divided by interest earned
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The principal, plus interest
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The principal, minus interest
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The principal amount
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Detailed explanation-1: -Simple interest is calculated by multiplying loan principal by the interest rate and then by the term of a loan. Simple interest can provide borrowers with a basic idea of a borrowing cost. Auto loans and short-term personal loans are usually simple interest loans.
Detailed explanation-2: -Simple interest is calculated on the principal, or original, amount of a loan. Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”
Detailed explanation-3: -What is Simple Interest, A = P (1+rt) The rate at which you borrow or lend money is called the simple interest. If a borrower takes money from a lender, an extra amount of money is paid back to the lender. The borrowed money which is given for a specific period is called the principal.