ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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simple interest
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compound interest
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special interest
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double interest
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Detailed explanation-1: -Compound interest simply means that the interest associated with a bank account, loan, or investment increases exponentially-rather than linearly-over time.
Detailed explanation-2: -The effect of compound interest over time In the early years of saving, it may seem like you’re earning only a modest amount of interest, but give it time. With each passing year, your compounding interest grows exponentially until it exceeds your principal and is responsible for most of the growth in your account.
Detailed explanation-3: -When it comes to investing, compound interest is better since it allows funds to grow at a faster rate than they would in an account with a simple interest rate. Compound interest comes into play when you’re calculating the annual percentage yield. That’s the annual rate of return or the annual cost of borrowing money.
Detailed explanation-4: -Compound interest is an example of an exponential function. Final value equals initial value. Final value equals initial value plus one period’s worth of interest.
Detailed explanation-5: -Certificates of deposit (CDs) High-yield savings accounts. Bonds and bond funds. Money market accounts. Dividend stocks. Real estate investment trusts (REITs) 02-Aug-2022