The Payment of Interest Not Only on the Original Deposit

question 88

Multiple Choice

The payment of interest not only on the original deposit, but on all previously accumulated interest is called:

• A)the real interest rate.
• B)the nominal interest rate.
• C)compound interest.
• D)simple interest.

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Definitions:

Times-Interest-Earned Ratio

A financial metric used to measure a company's ability to meet its debt obligations based on its earnings before interest and taxes (EBIT).

Debt-To-Equity Ratio

An economic indicator reflecting the balance between equity and debt in funding a corporation's resources.

Quick Ratio

A liquidity measure that indicates a company's ability to meet short-term obligations with its most liquid assets, excluding inventories.

Bond-Rating Agencies

Organizations that evaluate and assign ratings to various debt securities and their issuers, indicating the creditworthiness of the issuing entity.