Which of the following is TRUE about simple interest? A. We never use simple interest rates...
Which of the following is TRUE about simple interest?
A. We never use simple interest rates in financial calculations.
B. If we have an effective annual rate (EAR) of return for 3 years, we can just divide the EAR by 3 to get the equivalent annual simple rate of return.
C. Simple interest does not allow for any interest-on-interest.
D. Both B and C are correct.
Homework Answers
Option A is false as we use simple interest in some calculations and use of simple or compound is based on the user
option B is correct as or equivalent annual simple interest is nothing but the effective rate divide by no of years
Option C is correct as simple interest means no interest on interest earned
answer is option D
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