interest test - Pfriansh Kar | Biblioteka

1

What is the basic definition of interest in business?

Money invested in a company

Profit from selling products

Payment for the use of borrowed money

Income from part-time jobs

1

Which term refers to the interest that is calculated only on the initial amount that was deposited or borrowed?

Simple Interest

Cumulative Interest

Residual Interest

Compound Interest

1

What does APR stand for in terms of interest?

Annual Percentage Rate

Asset Percentage Rate

Annual Payment Requirement

Annual Profit Return

1

What impact does increasing interest rate have on borrowing?

None, there is no effect on borrowing

Makes borrowing cheaper

Increases the business income

Makes borrowing more expensive

1

If you take a loan, what does Finance Charge represent?

Interest rate on the loan

The amount borrowed

Total cost of using credit

The premium for the loan insurance

1

In the formula FC = PRT, what is represented by 'P'?

Profit

Principal

Percentage

Payment

1

If the loan is $2000 and the add-on interest rate is 12%. What is the amount of the add-on interest for 2 years?

$240

$360

$480

$120

1

What is the purpose of the formula MP = (P + FC)/N in business?

Calculates monthly profits for a buisness

Calculate net profit

Calculate discount

Calculate revenue

1

What is the main difference between Compound and Simple Interest?

Compound interest is accumulated on principle and previous interest

Simple interest is computed on initial amount only

Compound interest is computed on the initial amount only

Both are calculated on the initial amount only

1

How does the frequency of compounding periods affect Compound Interest?

Frequency of compounding doesn't affect compound interest

Both Compound and Simple Interest are affected similarly by frequency

More frequent compounding results in lower interest

More frequent compounding results in higher interest