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

Short-term loan

Monthly grocery spending

One-time purchase

Long-term investment

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

Loan duration is short

Loan amount is large

Interest rates are high

Loan duration is long

3. What does "rate of interest" signify?

The percentage of principal paid as interest

The period of investment

The annual income

The total amount received

4. 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

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

Total value

Net Worth

Amount

Yield

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

Higher the effective return

Time required increases

Interest remains constant

Lower the effective return

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

Interest deducted before investment

Interest calculated on the principal and the accumulated interest

Interest calculated on the initial principal only

Interest calculated only on loans

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

Doubled and time is halved

Halved and time is doubled

Rate and time remain the same

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

Interest is paid at the end of 2 years

Interest is added to principal every month

Interest is added to principal once every year

Interest is never added to principal

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

Principal

Rate

Compounding frequency

Time

11. The term "annually compounded" refers to:

Ignoring the principal

Interest being added once every year

Simple interest applied twice

Doubling the interest rate

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

Flat Rate Interest

Simple and Compound Interest

Only Compound Interest

Reducing Interest

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

Simple Interest

Net Interest

Gross Interest

Compound Interest

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

Zero

Less than Simple Interest

Equal to Simple Interest

Greater than Simple Interest

15. Which one of the following can be negative?

None of these

Interest

Time

Principal

16. Which one is not a method of compounding?

Yearly

Static

Monthly

Daily

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

Increases interest

Decreases interest

No effect

Makes interest variable

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

Long-term home loan

Fixed deposit

Short-term personal loan

Recurring deposit

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

Compounded semi-annually

Compounded quarterly

Compounded monthly

Compounded annually

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

Halves

No change

Doubles

Triples

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

Interest after time period

Total amount repaid

Total interest earned

Original amount invested or borrowed

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

It is only applicable on savings accounts

It includes interest on previously accumulated interest

It remains constant every year

It is always less than Simple Interest

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

Compound Interest

Decreasing Interest

No Interest

Simple Interest

24. Which interest model is easiest to manually calculate?

Compound Interest

Simple Interest

Reducing Balance Interest

Continuous Compound Interest

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

CI decreases with time

CI remains constant over time

CI increases with time

CI becomes SI over time

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

Rate of interest

Inflation rate

Principal amount

Time period

27. Which formula is used for Compound Interest calculation?

CI = P × (1 + R/100)^T – P

CI = P × T / R

CI = P × R × T / 100

CI = P × R / (1 + T)

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

₹1000

₹200

₹0

₹500

29. What is the formula for calculating Simple Interest?

(Principal × Rate × Time) / 100

(Principal + Rate + Time) / 3

(Principal × Rate) / Time

(Principal × Time) / Rate

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

Monthly Compound Interest

Quarterly Simple Interest

Simple Interest

Flat Rate Interest

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

Increase in total interest

Decrease in total interest

Interest becomes simple

No effect

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

Always greater than Simple Interest

Always less than Simple Interest

Always equal to Simple Interest

Sometimes less, sometimes more

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

Negative

Equal to time

Maximum

Zero

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

Compound Interest

Both are equal

Simple Interest

It depends on principal

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

Increase in time

Both A and B

Decrease in rate

Decrease in time

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

Term deposit

Taxation value

Time in years

Total amount

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

Compound Interest

Reducing Balance Method

Simple Interest

Flat Interest

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

Compound Interest

Reducing Balance Interest

Flat Interest

Simple Interest

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

Time

Rate

Mode of repayment

Principal

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

Cannot be determined

Zero

Equal to time

Equal to rate

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

Due to increase in rate

Due to fixed principal

Due to repeated compounding

Due to decrease in time

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

Principal

Compound effect

Bonus

Interest on interest

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

It decreases

It becomes simple interest

It increases

It remains constant

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

SI is compounded annually

SI is constant per year

SI is easy to calculate

SI increases linearly

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

Decreasing principal

Decreasing time

Fixing interest type

Increasing rate

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

No interest at all

The same as simple interest

Highest interest return

The lowest amount among compound options

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

Annually

Quarterly

Monthly

All equal

48. If interest is calculated using the formula

which type of interest is being used?

Compound Interest

Simple Interest

No Interest

Flat Interest

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

Interest is compounded annually

Interest rate is very low

Rate is 0%

Rate is 100%

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Mustansar KhanLast Updated: July 2, 2025

Quantitative Reasoning Simple and Compound Interest Online Test

Quantitative Reasoning Aptitude Test

Simple and Compound Interest Test Online

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