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Basic Questions of Compound Interest Video Lecture | Quantitative Aptitude for SSC CGL

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FAQs on Basic Questions of Compound Interest Video Lecture - Quantitative Aptitude for SSC CGL

1. What is compound interest?
Ans. Compound interest is the interest that is calculated on both the initial principal amount and any accumulated interest from previous periods. It differs from simple interest, as it takes into account the compounding of interest over time.
2. How is compound interest different from simple interest?
Ans. Compound interest is different from simple interest because it takes into account the accumulation of interest over time. With compound interest, the interest earned in each period is added to the principal, and subsequent interest is calculated based on the new total. Simple interest, on the other hand, is calculated only on the initial principal amount.
3. How is compound interest calculated?
Ans. Compound interest can be calculated using the formula: A = P(1 + r/n)^(nt), where A is the future value of the investment, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years.
4. What is the importance of compound interest?
Ans. Compound interest is important because it allows investments to grow at an accelerated rate over time. The compounding effect can significantly increase the value of investments, making it a powerful tool for long-term saving and wealth accumulation.
5. Can compound interest work against you?
Ans. While compound interest is generally beneficial when you are earning it on investments, it can work against you when you have debt or loans. In these cases, compound interest can cause the debt to grow rapidly if not managed properly. It is important to be aware of the compounding effect and make timely payments to avoid accumulating excessive interest on debts.
333 videos|195 docs|244 tests

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