#1
What is compound interest?
Interest calculated on both the principal amount and the accumulated interest
ExplanationInterest on principal and accumulated interest.
#2
What is the formula for compound interest?
A = P(1 + r/n)^nt
ExplanationCompound interest formula.
#3
Which of the following is NOT a factor affecting compound interest?
Time
ExplanationTime does not affect compound interest.
#4
What is the Rule of 72 used for in investment?
Estimating the time it takes for an investment to double at a given interest rate
ExplanationEstimating doubling time with Rule of 72.
#5
What is the difference between simple interest and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal amount and the accumulated interest.
ExplanationSimple interest vs. compound interest.
#6
Which of the following is true about the concept of 'time value of money'?
Money saved today is worth more than the same amount in the future due to its potential earning capacity.
ExplanationTime value of money: Present worth more.
#7
What is the significance of the 'compounding frequency' in compound interest calculations?
It determines how often interest is added to the principal amount.
ExplanationCompounding frequency impact on interest.
#8
Which investment strategy typically offers higher returns but also higher risk?
Stocks
ExplanationHigher returns and risk with stocks.
#9
What is the concept of 'dollar-cost averaging' in investment?
Investing a fixed amount of money at regular intervals, regardless of market conditions.
ExplanationRegular fixed investments: Dollar-cost averaging.