Compound Interest

Question 1

When the interest due at the end of a certain period is added to the principal and that sum earns interest for the next period, the interest paid is called

Answer 1

compound interest.

Question 2

When interests are subtracted to the principal to become the new principal, the resulting interest is said to be compounded

T or F

Answer 2

F - when interests are added

Question 3

The periods of time when the addition of interest and the principal occur is referred to as

Answer 3

conversion period

Question 4

the accumulated amount of a given principal at the end of a given interval

Answer 4

Compound amount

Question 5

the original principal minus the compound amount.

Answer 5

Compound interest

Question 6

the length of time of which the compound interest is to be calculated

Answer 6

Term

Question 7

the quoted rate which is the basis for converting the interest rate per conversion period

Answer 7

Nominal rate