The Primary Difference Between Simple and Compound Interest Is That

question 55

Multiple Choice

The primary difference between simple and compound interest is that:

• A) Simple interest is only paid at the end of the investment period.
• B) Compound interest entails receiving interest payments on previously earned interest.
• C) Compound interest is paid up front and not when the investment matures.
• D) Simple interest is not taxed by the federal government.
• E) Simple interest earns a higher interest rate on reinvested interest than compound interest.

---

Definitions:

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter with a certain level of confidence.

Population Standard Deviation

A measure of the dispersion or variability within a total population, quantifying how much the individual data points differ from the population mean.

Average Income

Average income is the total income divided by the number of entities in the group, providing a simple measure of the economic well-being of a population.

Confidence Interval

An interval of values, obtained from sample observations, that is likely to include the actual population parameter within a specified confidence level.