When an investment pays only simple interest, this means:
A)The interest rate is lower than on comparable investments
B)The future value of the investment will be low
C)The earned interest is non-taxable to the investor
D)Interest is earned only on the original investment

Question

Quizplus · Accepted Answer

Simple interest means that the interest is only earned on the original investment and not on any accumulated interest. This results in a lower future value compared to compound interest investments. The interest earned is taxable to the investor at their applicable tax rate.

When an Investment Pays Only Simple Interest, This Means