When the Amount Earned on a Deposit Has Become Part

question 116

Multiple Choice

When the amount earned on a deposit has become part of the principal at the end of a specified time period the concept is called

• A)discount interest.
• B)compound interest.
• C)primary interest.
• D)future value.

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Definitions:

Desired Investment

The level of investment that firms plan or wish to undertake based on their expectations of future economic conditions.

Interest Rate

The interest rate is the percentage charged on the total amount lent or paid on invested funds, typically expressed on an annual basis.

Loanable Funds

Money available for borrowing, which is determined by the savings in the economy plus the money provided by banks and other financial institutions.

Interest Rate

The requisition, as a percentage of the principal, placed by lenders on borrowers for asset use.