Question What is the difference between simple interest and compound interest?(1 point) Responses Compound interest is better for borrowers of money, while simple interest works harder for investors and savers. Compound interest is better for borrowers of money, while simple interest works harder for investors and savers. Compound interest is unpredictable, and does not allow savers to calculate interest earned over time like simple interest. Compound interest is unpredictable, and does not allow savers to calculate interest earned over time like simple interest. Simple and compound interest rates both change based on an index, but only simple interest rates collect interest on the original principal. Simple and compound interest rates both change based on an index, but only simple interest rates collect interest on the original principal. A simple interest rate earns interest only on the principal, while compound interest earns interest on any interest accrued over time as well.

Answer 1

The correct response is: A simple interest rate earns interest only on the principal, while compound interest earns interest on any interest accrued over time as well.

This highlights the fundamental difference between the two types of interest calculations. Simple interest is calculated solely on the initial principal, while compound interest takes into account accumulated interest, leading to potentially higher returns over time.