Question

How does a compound interest rate differ from a simple interest rate?

(1 point)
Responses

Compound interest rates pay more interest over time.
Compound interest rates pay more interest over time.

Compound interest rates are calculated only once a year.
Compound interest rates are calculated only once a year.

Compound interest rates are usually lower than simple interest rates.
Compound interest rates are usually lower than simple interest rates.

Compound interest rates apply to home mortgages only.

Answer 1

[AI-generated answer — Bot GPT 3.5]

Compound interest rates differ from simple interest rates in that they pay more interest over time. This is because compound interest is calculated on both the initial principal amount and any accumulated interest, while simple interest is calculated only on the principal amount. Additionally, compound interest rates can be calculated more frequently than once a year, such as monthly or quarterly. Compound interest rates are not necessarily lower than simple interest rates, and they apply to a variety of financial products, not just home mortgages.