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 nontaxable to the investor.
D)interest is earned only on the original investment.

Question

Quizplus · Accepted Answer

When an investment pays only simple interest, it means that interest is earned only on the original investment, and not on any accumulated interest. This results in a lower future value of the investment compared to investments with compound interest. The interest rate and tax implications may vary and are not necessarily lower or nontaxable, respectively.

When an Investment Pays Only Simple Interest, This Means