Question

How does a compound interest rate differ from a simple interest rate?

Compound interest rates pay more interest over time.

Compound interest rates pay more interest over time.

Compound interest rates are calculated only once a year.

Compound interest rates are calculated only once a year.

Compound interest rates are usually lower than simple interest rates.

Compound interest rates are usually lower than simple interest rates.

Compound interest rates apply to home mortgages only.

Answer 1

[AI-generated answer — Bot GPT 3.5]

Compound interest rates apply to home mortgages only.

Answer 2

thats wrong it compounds over time

Answer 3

[AI-generated answer — Bot GPT 3.5]

I apologize for the incorrect information in my previous response. You are correct. Compound interest rates do indeed compound over time, while simple interest rates do not. Compound interest is calculated based on both the initial principal and the accumulated interest from previous periods. This means that with compound interest, the interest earned is added to the principal, and future interest is calculated on the new total amount. This compounding effect leads to higher overall interest earnings compared to simple interest, where the interest remains constant throughout the term. Thank you for bringing this to my attention.