Finance Quiz

1. What is the formula for calculating simple interest?
P × r × t
P × r × n
P × (1 + r)t
2. What is the formula for calculating compound interest?
P × (1 + r)t
P × r × t
P × r × n
3. What is the term for the amount of money borrowed or invested, also known as the principal?
Rate
Interest
Principal
4. What is the term for the rate at which interest is charged or earned?
Interest
Rate
Time
5. What is the term for the length of time for which interest is calculated?
Time
Rate
Interest
6. A sum of $5,000 is invested at a rate of 6% per annum for 2 years. What is the simple interest earned?
$500
$400
$600
7. A sum of $10,000 is invested at a rate of 8% per annum compounded annually for 3 years. What is the compound interest earned?
$2,208
$2,944
$1,800
8. Which type of interest pays interest on both the principal and any accumulated interest?
Compound interest
Simple interest
Annual interest
9. A sum of $2,500 is invested at a rate of 4% per annum compounded quarterly for 2 years. What is the compound interest earned?
$220.20
$214.32
$208.50
10. Which type of interest is calculated only on the principal amount?
Compound interest
Simple interest
Annual interest
11. A sum of $1,000 is invested at a rate of 5% per annum compounded semi-annually for 3 years. What is the compound interest earned?
$162.89
$166.38
$160.38
12. A sum of $8,000 is invested at a rate of 10% per annum compounded annually for 5 years. What is the compound interest earned?
$4,804.00
$4,613.36
$4,451.52
13. What is the term for the frequency with which interest is compounded?
Time
Rate
Compounding period
14. A sum of $12,000 is invested at a rate of 9% per annum compounded annually for 4 years. What is the total amount of money in the account at the end of 4 years?
$17,220
$19,440
$18,360
15. A sum of $6,000 is invested at a rate of 3.5% per annum compounded quarterly for 1 year. What is the total amount of money in the account at the end of 1 year?
$6,250.00
$6,262.39
$6,236.74