True of falce: higher compounding frequency always results in a higher final interest.
True.
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15
Does principal stay the same in compound interest scenario?
No, it changes every time the interest is compounded (calculated).
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15
What factors influence total amount of compound interest to be paid?
Beginning principal, compounding frequency, and interest rate.
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15
What type of compounding frequency is usually used by banks when computing mortgage interest?
Interest, compounded monthly.
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15
What mathematical concept is compound interest based upon?
It's based on the idea of geometrical progression.
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15
How does principal change in compound interest scenario?
It keeps on growing because every time interest is computed it is added to the principal.
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15
You borrow $100, and interest is compounde semi-annually at 5% rate. What will be the amount of principle after first 6 month?
$100 + ($100x 5%)=$105
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15
Is amount of compound interest the same every time it is computed?
No, it grows because it is computed based on growing principle.
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15
What is compounding frequency?
It's a number of times interest is compounded (calculated).
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15
True of false: You can easily back out of any business agreement (without any penalties), if you discover that the conditions were not clearly disclosed to you.
False. It's your responsibility: "caveat emptor" (Buyer Beware)
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What type of compounding frequency is usually used by credit card companies?
Interest, compounded daily.
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15
True of false: You can fully trust any bank without even reading terms of their financial agreement.
