#1
What is the formula for calculating simple interest?
P × r × t
ExplanationSimple interest is calculated by multiplying the principal amount, the rate of interest, and the time period.
#2
Which of the following represents the principal amount in simple interest?
The total amount borrowed or invested
ExplanationThe principal amount in simple interest represents the initial amount of money borrowed or invested.
#3
In simple interest, what does the variable 'r' represent?
The rate of interest per time period
Explanation'r' represents the rate of interest per time period (usually per annum) in simple interest calculations.
#4
Which of the following is true about the time period 't' in simple interest?
It is always expressed in years
ExplanationThe time period 't' in simple interest is always expressed in years.
#5
What is the difference between the amount and the principal in a simple interest calculation?
The difference represents the total interest earned
ExplanationThe difference between the amount and the principal in a simple interest calculation represents the total interest earned.
#6
If the principal is $1000, the rate of interest is 5% per annum, and the time period is 2 years, what is the simple interest?
$50
ExplanationSimple interest is calculated using the formula: P × r × t. So, 1000 × 0.05 × 2 = 50.
#7
Which of the following statements about simple interest is correct?
Simple interest is calculated only on the initial principal amount
ExplanationSimple interest is calculated solely based on the initial principal amount.
#8
If the principal is $2000, the rate of interest is 8% per annum, and the time period is 3 years, what is the simple interest?
$480
ExplanationSimple interest is calculated using the formula: P × r × t. So, 2000 × 0.08 × 3 = 480.
#9
Which of the following represents the formula for calculating the amount (A) after simple interest is applied?
A = P × (1 + rt)
ExplanationThe amount after simple interest is applied can be calculated using the formula: A = P × (1 + rt), where P is the principal amount.
#10
If the principal is $3000, the simple interest is $450, and the rate of interest is 5%, what is the time period?
3 years
ExplanationTime period can be calculated using the formula: t = I / (Pr), where I is the simple interest, P is the principal amount, and r is the rate of interest.
#11
What is the effective annual rate (EAR) if the nominal rate is 6% and interest is compounded quarterly?
6.135%
ExplanationThe effective annual rate (EAR) accounts for compounding frequency, calculated using the formula: (1 + (nominal rate / compounding frequency)) ^ compounding frequency - 1.
#12
If the principal is $5000, the simple interest is $750, and the time period is 5 years, what is the rate of interest?
7%
ExplanationRate of interest can be calculated using the formula: r = (I / Pt), where I is the simple interest, P is the principal amount, and t is the time period.
#13
If the simple interest earned is $1200, and the rate of interest is 10%, what is the principal amount?
$3000
ExplanationPrincipal amount can be calculated using the formula: P = I / (rt), where I is the simple interest earned and r is the rate of interest per time period.
#14
If the principal is $6000, the simple interest is $1200, and the time period is 2 years, what is the rate of interest?
10%
ExplanationRate of interest can be calculated using the formula: r = (I / Pt), where I is the simple interest, P is the principal amount, and t is the time period.
#15
Which of the following represents the correct formula for calculating the rate of interest (r) in simple interest?
r = (A - P) / (Pt)
ExplanationThe rate of interest (r) can be calculated using the formula: r = (A - P) / (Pt), where A is the total amount (including interest) and t is the time period.