ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a charge for lending money
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the amount owed for borrowing money
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the amount added into your savings account when opening a bank account
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a charge for convenience of accessing money in your bank
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Detailed explanation-1: -Interest is the monetary charge for borrowing money-generally expressed as a percentage, such as an annual percentage rate (APR). Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds.
Detailed explanation-2: -The sum of money you deposit into a savings account or borrow from a bank is called the principal. The fee to borrow money is called interest. When you borrow money you pay back the principal and interest to your lender.
Detailed explanation-3: -An interest rate tells you how high the cost of borrowing is, or high the rewards are for saving. So, if you’re a borrower, the interest rate is the amount you are charged for borrowing money, shown as a percentage of the total amount of the loan.
Detailed explanation-4: -Debt is anything owed by one party to another. Examples of debt include amounts owed on credit cards, car loans, and mortgages.
Detailed explanation-5: -Principal: The amount of debt, exclusive of interest, remaining on a loan. Principal and Interest to Income Ratio: The ratio, expressed as a percentage, which results when a borrower’s proposed Principal and Interest payment expenses is divided by the gross monthly household income.