A. Compound interest rates pay more interest over time.
Simple interest is calculated only on the principal amount, whereas compound interest is calculated on the principal amount as well as the accumulated interest over time. Therefore, compound interest rates will result in higher returns over time compared to simple interest rates.
How does a compound interest rate differ from a simple interest rate?
A.
Compound interest rates pay more interest over time.
B.
Compound interest rates are calculated only once a year.
C.
Compound interest rates are usually lower than simple interest rates.
D.
Compound interest rates apply to home mortgages only.
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