Simple interest rate for a term deposit implies that A.interest are calculated with respect to the initial investment in the term depositB.the interest rate is variable.C.interest is calculated with respect to an amount that incorporates all previous interestsD.interest for a given compounding period is calculated with respect to the original amount invested in the term deposit plus the last interest paid.
Question
Simple interest rate for a term deposit implies that A.interest are calculated with respect to the initial investment in the term depositB.the interest rate is variable.C.interest is calculated with respect to an amount that incorporates all previous interestsD.interest for a given compounding period is calculated with respect to the original amount invested in the term deposit plus the last interest paid.
Solution
The correct answer is A. Simple interest rate for a term deposit implies that interest is calculated with respect to the initial investment in the term deposit.
This means that the interest is calculated on the original amount of money deposited or borrowed, not on any interest that has been added over time.
Option B is incorrect because the simple interest rate is not variable, it is fixed over the term of the deposit.
Option C is incorrect because simple interest does not incorporate all previous interests. It is only calculated on the original amount.
Option D is also incorrect because, again, simple interest is only calculated on the original amount invested, not on the original amount plus the last interest paid.
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