101_4B_notes_quiz

The original amount on which interest is calculated is called the _______.

• A) interest

• B) principal

• C) compound

• D) simple

If the bank 10% per year on a savings bond and you deposit $1000 into the bond. What is the total amount of interest received over 5 years with simple interest?

• $400

• $500

• $600

• $1500

A different bank pays 10% interest each month using compound interest. If you make a deposit of $1000, what will the second interest payment be?

• $100

• $110

• $120

• $130

What is the formula used to calculate the second interest payment in the example?

• 10% × $1000

• 10% × $1100

• 10% × $1200

• 10% × $1300

Using simple interest, how much is in the account if $100 is deposited at 10% and left alone for 5 years.

• $150.00

• $500.00

• $61.05

• $161.05

Using compound interest, how much is in the account if $100 is deposited at 10% and left alone for 5 years.

• $150.00

• $500.00

• $61.05

• $161.05

What does APY stand for?

• A) Annual Percentage Yield

• B) Annual Profit Yield

• C) Annual Payment Yield

• D) Annual Percentage Year

APY is greater than APR when interest is compounded ____.

• annually

• more than once a year

• less than once a year

• not at all

Fill in the blank: For an APR of 8%, when the number of compounding periods (n) is 1,000,000, the APY is ______.

• 8.328706%

• 8.328672%

• 8.328360%

• 8.328013%

Fill in the blank: The APY for continuous compounding is approximately ________.

• A) 8.0

• B) 8.1

• C) 8.3287068

• D) 8.5