Interest earned only on an investment's principal or original amount is referred to as:
A) simple interest
B) compound interest
C) discount interest
D) annuity interest

Question

Quizplus · Accepted Answer

Simple interest is calculated on the principal amount only, while compound interest is calculated on both the principal amount and the accrued interest. Discount interest refers to a lower interest rate offered to borrowers who pay their debt early, while annuity interest refers to the interest earned on a series of regular payments (such as an annuity).

Interest Earned Only on an Investment's Principal or Original Amount