Simple interest is akin to the effective annual rate (EAR)and compound interest is akin to the annual percentage rate (APR).

Question

Quizplus · Accepted Answer

Simple interest is calculated based on the initial principal and does not take into account any interest earned over time. Effective annual rate (EAR) takes into account compounding to give a more accurate representation of the true interest earned. Compound interest, on the other hand, takes into account both the initial principal and any interest earned over time, and is represented by the annual percentage rate (APR).

Simple Interest Is Akin to the Effective Annual Rate (EAR)and