CI/SI/Saving/Graphs

Why is compound interest more advantageous than simple interest?

• It’s more difficult to calculate, so fewer people use compound interest, making more profits for those who do.
• Compound interest accumulates very rapidly, so you only have to save for 3 years or fewer to earn far more money.
• Compound interest is attached to the stocks with the highest risk, so you get the highest interest on them
• In compound interest, you earn interest on not only your principal, but also on the interest you’ve already made.

Why do companies issue stocks?

• To create and investment opportunity into other businesses.
• To increase employee cooperation 
• To be traded individually
• To raise money for economic investment

Why is compound interest more advantageous than simple interest?

• It’s more difficult to calculate, so fewer people use compound interest, making more profits for those who do.

• Compound interest accumulates very rapidly, so you only have to save for 3 years or fewer to earn far more money.

• Compound interest is attached to the stocks with the highest risk, so you get the highest interest on them.

• In compound interest, you earn interest on not only your principal, but also on the interest you’ve already made.

Your risk tolerance for investing should be determined by these two factors:

• Your stocks and bonds

• Your time horizon and when you will need access to the money

• Your debits and credits

• Your education level and ethnicity

You deposit $1,000 into a five-year certificate of deposit (a type of savings account with a fixed rate of interest) earning 1% per year that compounds interest annually. After five years, the balance in your account will be…

• About $1000

• More than $1000 but less than $1010

• More than $1010 but less than $1030

• Exactly $1050

• More than $1050

Which of the following statements is TRUE?

• the longer the term, the more total interest you pay

• the longer the term, the quicker you will pay off your loan

• the longer the term, the lower the total cost of your loan will be

• the longer the term, the more damaged your credit score will be

Emilio borrows $1200 from a bank with 8% simple interest per year.  How much will he have to pay back total in 2 years?

• $150
• $192
• $1350
• $1392

Principal = $500
Interest rate =5%
Time = 5 years
What is the interest earned?

• 95
• 105
• 125
• 135

Jenna borrowed $5,000 for 3 years and had to pay $1,350 simple interest at the end of that time. What rate of interest did she pay?

• 6%
• 6%
• 8%
• 9%

Dayton has $90 in a savings account that earns 5% annually. How much will he have in his account in 1 year? (Hint: First find the interest, then add it to the original amount.)

• $4.50

• $945

• $45

• $94.50