When Interest Is Credited the Instant It Is Earned It

question 301

Multiple Choice

When interest is credited the instant it is earned it is referred to as:

• A) Simple interest.
• B) Annually compounded interest.
• C) Continuously compounded interest.
• D) Amortized daily interest.
• E) Annuitized interest.

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Definitions:

Coupon Payment

A regular interest distribution to those holding bonds, often disbursed twice a year.

Market Price

The current price at which an asset or service is bought or sold in a marketplace.

Discounted Price

The reduced price of an item or security after applying a discount, often used in time value of money calculations.

Bond Ratings

A grade given to bonds that indicates their credit quality, with ratings provided by agencies like Moody's, S&P, and Fitch.