Which of the following statements is true?
A)Simple interest pays interest only on principle whereas compound interest also pays interest on interest.
B)Simple interest relates to future value whereas compound interest relates to present value.
C)Simple interest applies when an investor receives payment while compound interest applies when an investor makes payments.
D)Simple interest annualises rates while compound interest allows interest to be stated in any time period.
E)Simple interest relates to present value whereas compound interest relates to future value.

Question

Quizplus · Accepted Answer

Simple interest only pays interest on the principal amount, while compound interest pays interest on both the principal and previously accumulated interest.

Which of the Following Statements Is True