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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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Page 1 of 2

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

Fixing interest type

Increasing rate

Decreasing time

Decreasing principal

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

Compounded quarterly

Compounded semi-annually

Compounded annually

Compounded monthly

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

Flat Interest

Simple Interest

Compound Interest

Reducing Balance Interest

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

Mode of repayment

Time

Principal

Rate

5. Which interest model is easiest to manually calculate?

Simple Interest

Continuous Compound Interest

Reducing Balance Interest

Compound Interest

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

Quarterly Simple Interest

Simple Interest

Monthly Compound Interest

Flat Rate Interest

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

Monthly

Quarterly

All equal

Annually

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

Time

Rate

Principal

Compounding frequency

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

Rate and time remain the same

Doubled and time is halved

Halved and time is doubled

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

Interest calculated only on loans

Interest deducted before investment

Interest calculated on the principal and the accumulated interest

Interest calculated on the initial principal only

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

Lower the effective return

Time required increases

Higher the effective return

Interest remains constant

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

Reducing Interest

Flat Rate Interest

Only Compound Interest

Simple and Compound Interest

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

Short-term loan

Long-term investment

Monthly grocery spending

One-time purchase

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

Principal amount

Time period

Inflation rate

Rate of interest

15. Which one of the following can be negative?

Principal

None of these

Time

Interest

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

It includes interest on previously accumulated interest

It is always less than Simple Interest

It remains constant every year

It is only applicable on savings accounts

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

Reducing Balance Method

Simple Interest

Flat Interest

Compound Interest

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

Because it’s fixed

Because it reduces over time

Because it is lower

Because it grows exponentially

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

Fixed deposit

Recurring deposit

Long-term home loan

Short-term personal loan

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

Always greater than Simple Interest

Always equal to Simple Interest

Sometimes less, sometimes more

Always less than Simple Interest

21. If interest is calculated using the formula

which type of interest is being used?

Simple Interest

Compound Interest

No Interest

Flat Interest

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

Zero

Less than Simple Interest

Greater than Simple Interest

Equal to Simple Interest

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

Zero

Equal to time

Cannot be determined

Equal to rate

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

Rate is 0%

Interest is compounded annually

Rate is 100%

Interest rate is very low

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

Increases interest

Makes interest variable

Decreases interest

No effect

Page 2 of 2

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

₹1000

₹0

₹200

₹500

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

No Interest

Decreasing Interest

Compound Interest

Simple Interest

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

Total interest earned

Interest after time period

Original amount invested or borrowed

Total amount repaid

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

Increase in time

Decrease in rate

Both A and B

Decrease in time

30. Which formula is used for Compound Interest calculation?

CI = P × T / R

CI = P × R / (1 + T)

CI = P × R × T / 100

CI = P × (1 + R/100)^T – P

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

Yield

Total value

Amount

Net Worth

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

Taxation value

Term deposit

Time in years

Total amount

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

Interest becomes simple

Increase in total interest

Decrease in total interest

No effect

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

The same as simple interest

The lowest amount among compound options

No interest at all

Highest interest return

35. The term "annually compounded" refers to:

Simple interest applied twice

Ignoring the principal

Interest being added once every year

Doubling the interest rate

36. What does "rate of interest" signify?

The percentage of principal paid as interest

The total amount received

The annual income

The period of investment

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

Principal

Compound effect

Interest on interest

Bonus

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

Compound Interest

Net Interest

Simple Interest

Gross Interest

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

Negative

Equal to time

Zero

Maximum

40. Which one is not a method of compounding?

Daily

Static

Yearly

Monthly

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

It decreases

It increases

It remains constant

It becomes simple interest

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

Doubles

No change

Halves

Triples

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

It depends on principal

Compound Interest

Simple Interest

Both are equal

44. What is the formula for calculating Simple Interest?

(Principal × Rate) / Time

(Principal × Rate × Time) / 100

(Principal + Rate + Time) / 3

(Principal × Time) / Rate

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

CI decreases with time

CI increases with time

CI remains constant over time

CI becomes SI over time

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

Due to fixed principal

Due to decrease in time

Due to repeated compounding

Due to increase in rate

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

SI is compounded annually

SI is constant per year

SI increases linearly

SI is easy to calculate

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

Interest is added to principal every month

Interest is never added to principal

Interest is paid at the end of 2 years

Interest is added to principal once every year

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

Loan amount is large

Loan duration is short

Loan duration is long

Interest rates are high

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Mustansar KhanLast Updated: July 2, 2025

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Quantitative Reasoning Simple and Compound Interest Online Test

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