#1
What is the formula for compound interest?
P * (1 + r/n)^nt
ExplanationCompound interest formula with principal (P), interest rate (r), compounding frequency (n), and time (t).
#2
If the principal amount is $1000, the interest rate is 5%, and the time period is 2 years, what is the compound interest?
$102.50
ExplanationCalculation using compound interest formula with provided values.
#3
How often is interest compounded annually?
Once
ExplanationFrequency of compounding interest per year.
#4
What is the difference between compound interest and simple interest?
Compound interest includes interest on interest, while simple interest does not.
ExplanationContrast between compound interest's inclusion of interest on previous interest and simple interest's lack thereof.
#5
If the principal amount is $5000, the interest rate is 8%, and the time period is 3 years, what is the compound amount?
$6480
ExplanationCalculation using compound interest formula with provided values.
#6
If the principal amount is $8000, the interest rate is 10%, and the time period is 5 years, what is the compound interest?
$5104.89
ExplanationCalculation using compound interest formula with provided values.
#7
What is the present value formula used in compound interest calculations?
PV = FV / (1 + r/n)^nt
ExplanationFormula for present value (PV) in compound interest calculations.
#8
What does the term 'APY' stand for in the context of compound interest?
Annual Percentage Yield
ExplanationAcronym for Annual Percentage Yield, representing the effective annual rate of return.
#9
If the compound interest for an investment is $1200 and the principal amount is $10,000, what is the effective interest rate?
12%
ExplanationCalculation of effective interest rate using compound interest and principal values.
#10
What is the effective annual rate (EAR) if the nominal interest rate is 6% compounded quarterly?
6.09%
ExplanationCalculation of effective annual rate (EAR) taking into account compounding frequency.
#11
If the nominal interest rate is 8% compounded monthly, what is the equivalent nominal interest rate compounded quarterly?
9%
ExplanationConversion of nominal interest rate from monthly to quarterly compounding.
#12
What is the continuous compounding formula for compound interest?
P * e^(rt)
ExplanationContinuous compounding formula with principal (P), base of natural logarithm (e), interest rate (r), and time (t).
#13
What is the relationship between the nominal interest rate and the effective interest rate?
The effective interest rate is higher than the nominal interest rate.
ExplanationComparison indicating that the effective interest rate exceeds the nominal interest rate.
#14
If the principal amount is $3000, the interest rate is 6%, and the time period is 2 years, what is the compound amount compounded semi-annually?
$3615.09
ExplanationCalculation using compound interest formula with provided values and semi-annual compounding.
#15
If the principal amount is $7000, the interest rate is 12%, and the time period is 3 years, what is the compound amount compounded quarterly?
$10584.48
ExplanationCalculation using compound interest formula with provided values and quarterly compounding.