This test on Simple and Compound Interest contains 10+ multiple-choice questions designed to assess understanding of key financial concepts. The questions cover topics such as the formulas for simple and compound interest, the differences between them, and how interest is compounded over different periods. By completing this test, students will enhance their ability to calculate interest for various financial scenarios, solidifying their grasp of fundamental interest concepts.
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Direction: Choose the correct formula for simple interest
Q.1.
What is the formula for calculating simple interest?
- SI = (P x R x T) / 100
- SI = (P x R) / T
- SI = (P + R + T) / 100
- SI = (R x T) / P
Answer:
(a) SI = (P x R x T) / 100
Explanation: The correct formula for simple interest is (P x R x T) / 100
Explanation: The correct formula for simple interest is (P x R x T) / 100
Direction: Choose the correct representation of 'P' in the formula
Q.2.
What does 'P' represent in the simple interest formula?
- Rate of interest
- Time period
- Principal amount
- Final amount
Answer:
(c) Principal amount
Explanation: 'P' stands for the principal amount in the simple interest formula
Explanation: 'P' stands for the principal amount in the simple interest formula
Direction: Calculate the simple interest for given values
Q.3.
If the principal is ₹1,000, the rate of interest is 5% per annum, and the time is 2 years, what is the simple interest?
- ₹100
- ₹200
- ₹300
- ₹400
Answer:
(b) ₹200
Explanation: Simple interest is calculated using SI = (P x R x T) / 100
Explanation: Simple interest is calculated using SI = (P x R x T) / 100
Direction: Choose the correct base for compound interest
Q.4.
Compound interest is calculated on:
- Principal only
- Principal and accrued interest
- Rate of interest
- Time period only
Answer:
(b) Principal and accrued interest
Explanation: Compound interest is calculated on both principal and accrued interest
Explanation: Compound interest is calculated on both principal and accrued interest
Direction: Choose the correct formula for compound interest
Q.5.
What is the formula for calculating compound interest annually?
- A = P(1 + R/100)^T
- A = P + (R x T) / 100
- A = P x R x T
- A = P x T x (R / 100)
Answer:
(a) A = P(1 + R/100)^T
Explanation: Compound interest formula is A = P(1 + R/100)^T
Explanation: Compound interest formula is A = P(1 + R/100)^T
Direction: Calculate the final amount after 3 years
Q.6.
If a sum of ₹2,000 is invested at an interest rate of 6% per annum compounded annually for 3 years, what will be the amount after 3 years?
- ₹2,120
- ₹2,382.03
- ₹2,000
- ₹2,500
Answer:
(b) ₹2,382.03
Explanation: The final amount is calculated using the compound interest formula A = P(1 + R/100)^T
Explanation: The final amount is calculated using the compound interest formula A = P(1 + R/100)^T
Direction: Choose the correct difference
Q.7.
The difference between simple interest and compound interest on ₹5,000 for 2 years at a rate of 5% per annum is:
- ₹6.25
- ₹12.50
- ₹25
- ₹50
Answer:
(b) ₹12.50
Explanation: The difference is ₹12.50 due to the compound effect over 2 years
Explanation: The difference is ₹12.50 due to the compound effect over 2 years
Direction: Choose the correct number of compounding periods
Q.8.
If the interest is compounded half-yearly, how many times per year is the interest compounded?
- 1
- 2
- 3
- 4
Answer:
(b) 2
Explanation: Half-yearly compounding means the interest is compounded twice a year
Explanation: Half-yearly compounding means the interest is compounded twice a year
Q.9.
In compound interest, if the interest is compounded quarterly, the number of compounding periods in a year is:
- 1
- 2
- 3
- 4
Answer:
(d) 4
Explanation: Quarterly compounding means the interest is compounded 4 times a year
Explanation: Quarterly compounding means the interest is compounded 4 times a year
Direction: Calculate the rate of interest
Q.10.
A sum of money becomes ₹6,000 in 2 years and ₹6,600 in 3 years at compound interest. What is the rate of interest?
- 5%
- 10%
- 15%
- 20%
Answer:
(b) 10%
Explanation: The rate of interest is 10% based on the growth from ₹6,000 to ₹6,600 in one year
Explanation: The rate of interest is 10% based on the growth from ₹6,000 to ₹6,600 in one year
Direction: SSC 2022 question
Q.11.
A sum of ₹8,000 amounts to ₹9,261 in 2 years at compound interest. What is the rate of interest?
- 5%
- 7.5%
- 10%
- 12.5%
Answer:
(c) 10%
Explanation: The sum increased at a rate of 10% per annum
Explanation: The sum increased at a rate of 10% per annum
Direction: SSC 2019 question
Q.12.
The simple interest on a sum of ₹12,000 at 6% per annum for 4 years is:
- ₹2,880
- ₹2,400
- ₹3,000
- ₹2,700
Answer:
(a) ₹2,880
Explanation: Simple interest is calculated using the formula SI = (P x R x T) / 100
Explanation: Simple interest is calculated using the formula SI = (P x R x T) / 100
Direction: DSSSB 2020 question
Q.13.
In how many years will a sum of ₹1,000 become ₹1,210 at 10% compound interest per annum?
- 1 year
- 2 years
- 3 years
- 4 years
Answer:
(b) 2 years
Explanation: The sum will amount to ₹1,210 in 2 years at 10% compound interest
Explanation: The sum will amount to ₹1,210 in 2 years at 10% compound interest
Direction: SSC 2018 question
Q.14.
The difference between compound interest and simple interest on a sum of ₹5,000 for 3 years at 8% per annum is:
- ₹24
- ₹32
- ₹40
- ₹50
Answer:
(c) ₹40
Explanation: The difference is ₹40 due to compounding
Explanation: The difference is ₹40 due to compounding
Direction: DSSSB 2021 question
Q.15.
What is the compound interest on ₹10,000 at 5% per annum compounded yearly for 2 years?
- ₹1,000
- ₹1,025
- ₹1,050
- ₹1,100
Answer:
(b) ₹1,025
Explanation: The compound interest after 2 years is ₹1,025
Explanation: The compound interest after 2 years is ₹1,025
Direction: SSC 2021 question
Q.16.
At what rate of simple interest will a sum of money double itself in 12 years?
- 8.33%
- 10%
- 12%
- 14%
Answer:
(b) 10%
Explanation: The rate of interest should be 8.33% for the sum to double in 12 years
Explanation: The rate of interest should be 8.33% for the sum to double in 12 years
Direction: SSC 2022 question
Q.17.
If ₹6,000 becomes ₹7,200 in 2 years at simple interest, what is the rate of interest?
- 10%
- 12%
- 15%
- 20%
Answer:
(b) 12%
Explanation: The rate of interest is 10% using SI = (P x R x T) / 100
Explanation: The rate of interest is 10% using SI = (P x R x T) / 100
Direction: SSC 2020 question
Q.18.
At what rate will ₹10,000 amount to ₹11,000 in 2 years at compound interest?
- 4.88%
- 5%
- 9.53%
- 10%
Answer:
(a) 4.88%
Explanation: The rate is approximately 4.88%, calculated using the compound interest formula
Explanation: The rate is approximately 4.88%, calculated using the compound interest formula
Direction: SSC 2019 question
Q.19.
The simple interest on ₹5,000 at 8% per annum for 3 years is:
- ₹1,200
- ₹1,000
- ₹1,400
- ₹1,600
Answer:
(a) ₹1,200
Explanation: The simple interest is calculated as ₹1,200
Explanation: The simple interest is calculated as ₹1,200
Direction: DSSSB 2021 question
Q.20.
The compound interest on ₹4,000 for 2 years at 5% per annum compounded annually is:
- ₹410
- ₹400
- ₹420
- ₹450
Answer:
(a) ₹410
Explanation: The compound interest is ₹410 calculated using the compound interest formula
Explanation: The compound interest is ₹410 calculated using the compound interest formula
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