ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Interest paid on both the principal and the already earned interest
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The interest paid on the principal alone
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A fixed charge for borrowing money; usually a percentage of the amount borrowed
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The money originally invested or loaned
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Detailed explanation-1: -Simple interest is the interest charge on borrowing that’s calculated using an original principal amount only and an interest rate that never changes. It does not involve compounding, where borrowers end up paying interest on principal and interest that grows over multiple payment periods.
Detailed explanation-2: -A simple interest loan is a non-compounded loan. This means that your interest is calculated off the remaining principal balance of your loan, so that you pay a set monthly amount plus interest. If you can manage to pay more on this set amount, it will lower your payments going forward.
Detailed explanation-3: -Simple interest is calculated using only the principal balance of the loan. Generally, simple interest paid or received over a certain period is a fixed percentage of the principal amount that was borrowed or lent.
Detailed explanation-4: -Principal: The principal is the original amount borrowed for a loan or the original amount invested. Interest rate: The interest rate is the proportion of the principal that is added to the principal at each time period.
Detailed explanation-5: -Simple interest is relatively straightforward. Your outstanding principal balance is multiplied by the daily interest rate (your interest rate divided by 365) to calculate your interest payment. Essentially, you pay interest based on how much of the principal you still owe and the number of days you owe it.