Home/Aptitude Test/Quantitative Reasoning Simple and Compound Interest Online Test

Quantitative Reasoning Simple and Compound Interest Online Test

Mustansar KhanLast Updated: July 2, 2025

Quantitative Reasoning Aptitude Test

Simple and Compound Interest Test Online

Total Questions:	50
Time Allowed:	25 Minutes
Total Marks:	50
How to Attempt Test:	Please choose the right Option in MCQ-type question.
Test Helpful For:	Aptitude Test Quantitative Reasoning Decimal Fraction Test Mathematics Aptitude Questions Entrance Tests and Recruitment Test

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1. If the principal amount is constant, what increases the Simple Interest?

Decrease in rate

Both A and B

Decrease in time

Increase in time

2. What is the effect of higher interest rate on compound interest?

Decrease in total interest

Increase in total interest

Interest becomes simple

No effect

3. What does the term "Simple Interest" refer to in financial calculations?

Interest calculated on the initial principal only

Interest calculated on the principal and the accumulated interest

Interest calculated only on loans

Interest deducted before investment

4. Which frequency yields the highest interest: annually, quarterly, or monthly?

Quarterly

All equal

Annually

Monthly

5. Which of the following directly increases both SI and CI?

Increasing rate

Decreasing principal

Decreasing time

Fixing interest type

6. Why is Compound Interest considered more beneficial for investors?

Because it’s fixed

Because it reduces over time

Because it grows exponentially

Because it is lower

7. What does "rate of interest" signify?

The total amount received

The period of investment

The annual income

The percentage of principal paid as interest

8. The longer the compounding period (monthly, daily), the:

Time required increases

Higher the effective return

Interest remains constant

Lower the effective return

9. Which interest model is easiest to manually calculate?

Compound Interest

Simple Interest

Reducing Balance Interest

Continuous Compound Interest

10. If the interest is compounded half-yearly, the rate is:

Rate and time remain the same

Halved and time is doubled

Doubled and time is halved

11. What is the formula for calculating Simple Interest?

(Principal × Time) / Rate

(Principal × Rate) / Time

(Principal + Rate + Time) / 3

(Principal × Rate × Time) / 100

12. Which of the following statements is true about Compound Interest?

It is always less than Simple Interest

It remains constant every year

It is only applicable on savings accounts

It includes interest on previously accumulated interest

13. Which formula is used for Compound Interest calculation?

CI = P × (1 + R/100)^T – P

CI = P × R × T / 100

CI = P × R / (1 + T)

CI = P × T / R

14. In compound interest, what does "T" stand for?

Term deposit

Taxation value

Total amount

Time in years

15. Which of the following is not true for Simple Interest?

SI increases linearly

SI is easy to calculate

SI is constant per year

SI is compounded annually

16. If you invest for 10 years, which method gives maximum returns?

Monthly Compound Interest

Flat Rate Interest

Quarterly Simple Interest

Simple Interest

17. Which factor plays the least role in determining interest?

Rate

Principal

Mode of repayment

Time

18. Which one is not a method of compounding?

Daily

Static

Yearly

Monthly

19. In compound interest, compounding done annually results in:

Highest interest return

The same as simple interest

No interest at all

The lowest amount among compound options

20. Which one of the following can be negative?

Time

None of these

Interest

Principal

21. In Compound Interest, the term “compounded annually” means:

Interest is paid at the end of 2 years

Interest is never added to principal

Interest is added to principal once every year

Interest is added to principal every month

22. Which type of interest gives returns on reinvested interest?

Simple Interest

Flat Interest

Compound Interest

Reducing Balance Interest

23. Why is the compound interest amount greater over a long period?

Due to repeated compounding

Due to increase in rate

Due to fixed principal

Due to decrease in time

24. The term “principal” in interest calculation means:

Total amount repaid

Original amount invested or borrowed

Interest after time period

Total interest earned

25. For which of the following would a borrower prefer simple interest?

Short-term personal loan

Fixed deposit

Long-term home loan

Recurring deposit

Page 2 of 2

26. For the same principal, rate, and time, the Compound Interest is:

Always equal to Simple Interest

Sometimes less, sometimes more

Always greater than Simple Interest

Always less than Simple Interest

27. In compound interest, interest calculated over previous interest is called:

Compound effect

Principal

Interest on interest

Bonus

28. Which of the following is not a component of the Simple Interest formula?

Compounding frequency

Time

Rate

Principal

29. Which factor does not affect the calculation of Simple Interest?

Principal amount

Rate of interest

Time period

Inflation rate

30. A fixed deposit earns which type of interest in most cases?

Decreasing Interest

No Interest

Compound Interest

Simple Interest

31. The amount obtained after adding interest to the principal is called:

Total value

Net Worth

Amount

Yield

32. What is the impact of increasing the time period on simple interest?

Makes interest variable

Increases interest

Decreases interest

No effect

33. In the absence of compounding, Compound Interest becomes:

Zero

Less than Simple Interest

Greater than Simple Interest

Equal to Simple Interest

34. What happens to the Compound Interest if the compounding frequency increases?

It remains constant

It becomes simple interest

It increases

It decreases

35. In compound interest, if the rate is 0%, the interest becomes:

Maximum

Negative

Zero

Equal to time

36. Which interest is always higher if the time is more than one year?

Compound Interest

It depends on principal

Both are equal

Simple Interest

37. If time is doubled in simple interest formula, what happens to the interest?

Halves

Doubles

No change

Triples

38. The interest which is calculated without taking into account previously earned interest is:

Net Interest

Simple Interest

Gross Interest

Compound Interest

39. What will be the compound interest if the principal is zero?

Equal to time

Zero

Cannot be determined

Equal to rate

40. What is the relation between time and compound interest?

CI remains constant over time

CI becomes SI over time

CI decreases with time

CI increases with time

41. In the context of loans, Simple Interest is preferred when:

Loan duration is long

Loan duration is short

Loan amount is large

Interest rates are high

42. Which of the following gives equal values in the first year of investment?

Simple and Compound Interest

Only Compound Interest

Flat Rate Interest

Reducing Interest

43. The term "annually compounded" refers to:

Doubling the interest rate

Interest being added once every year

Ignoring the principal

Simple interest applied twice

44. For a fixed rate and time, which principal earns the least interest?

₹500

₹0

₹1000

₹200

45. Which method is used by banks to calculate interest on savings?

Reducing Balance Method

Compound Interest

Simple Interest

Flat Interest

46. Which of the following scenarios would benefit from compound interest over time?

Long-term investment

One-time purchase

Short-term loan

Monthly grocery spending

47. If the compound interest on a sum for 2 years is equal to simple interest, then:

Rate is 100%

Interest rate is very low

Rate is 0%

Interest is compounded annually

48. If interest is calculated using the formula

Simple Interest

which type of interest is being used?

No Interest

Compound Interest

Flat Interest

49. Which of the following results in the highest amount of compound interest?

Compounded monthly

Compounded quarterly

Compounded semi-annually

Compounded annually

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Mustansar KhanLast Updated: July 2, 2025

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Quantitative Reasoning Simple and Compound Interest Online Test

Quantitative Reasoning Aptitude Test

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