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

Compound effect

Principal

Interest on interest

Bonus

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

Recurring deposit

Long-term home loan

Short-term personal loan

Fixed deposit

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

Principal amount

Time period

Inflation rate

Rate of interest

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

Equal to rate

Zero

Equal to time

Cannot be determined

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

Reducing Balance Method

Flat Interest

Compound Interest

Simple Interest

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

Interest after time period

Total amount repaid

Original amount invested or borrowed

Total interest earned

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

No effect

Decrease in total interest

Interest becomes simple

Increase in total interest

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

Due to decrease in time

Due to fixed principal

Due to increase in rate

Due to repeated compounding

9. Which one is not a method of compounding?

Static

Yearly

Daily

Monthly

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

Flat Rate Interest

Simple Interest

Monthly Compound Interest

Quarterly Simple Interest

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

Higher the effective return

Interest remains constant

Lower the effective return

Time required increases

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

₹0

₹200

₹1000

₹500

13. What is the formula for calculating Simple Interest?

(Principal + Rate + Time) / 3

(Principal × Rate × Time) / 100

(Principal × Time) / Rate

(Principal × Rate) / Time

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

Net Worth

Amount

Total value

Yield

15. Which one of the following can be negative?

None of these

Principal

Interest

Time

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

Total amount

Taxation value

Time in years

Term deposit

17. 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

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

Increasing rate

Decreasing time

Fixing interest type

Decreasing principal

19. What does "rate of interest" signify?

The total amount received

The percentage of principal paid as interest

The annual income

The period of investment

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

Interest calculated on the initial principal only

Interest deducted before investment

Interest calculated only on loans

Interest calculated on the principal and the accumulated interest

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

Loan amount is large

Loan duration is long

Loan duration is short

Interest rates are high

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

Negative

Equal to time

Zero

Maximum

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

Interest is never added to principal

Interest is added to principal every month

Interest is paid at the end of 2 years

Interest is added to principal once every year

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

It remains constant

It increases

It decreases

It becomes simple interest

25. If interest is calculated using the formula

Flat Interest

which type of interest is being used?

Simple Interest

Compound Interest

No Interest

Page 2 of 2

26. The term "annually compounded" refers to:

Doubling the interest rate

Simple interest applied twice

Interest being added once every year

Ignoring the principal

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

Quarterly

All equal

Annually

Monthly

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

Decreasing Interest

No Interest

Compound Interest

Simple Interest

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

Sometimes less, sometimes more

Always equal to Simple Interest

Always less than Simple Interest

Always greater than Simple Interest

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

Flat Interest

Simple Interest

Compound Interest

Reducing Balance Interest

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

Because it reduces over time

Because it is lower

Because it grows exponentially

Because it’s fixed

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

Equal to Simple Interest

Zero

Greater than Simple Interest

Less than Simple Interest

33. 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

34. Which formula is used for Compound Interest calculation?

CI = P × R × T / 100

CI = P × (1 + R/100)^T – P

CI = P × R / (1 + T)

CI = P × T / R

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

Increases interest

No effect

Makes interest variable

Decreases interest

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

Simple Interest

It depends on principal

Compound Interest

Both are equal

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

SI is constant per year

SI is easy to calculate

SI increases linearly

SI is compounded annually

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

Rate

Mode of repayment

Time

Principal

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

Triples

Doubles

No change

Halves

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

It remains constant every year

It includes interest on previously accumulated interest

It is always less than Simple Interest

It is only applicable on savings accounts

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

Long-term investment

Monthly grocery spending

Short-term loan

One-time purchase

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

Compounding frequency

Principal

Rate

Time

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

Halved and time is doubled

Doubled and time is halved

Rate and time remain the same

Halved and time is doubled

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

Compounded annually

Compounded quarterly

Compounded monthly

Compounded semi-annually

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

Net Interest

Compound Interest

Gross Interest

Simple Interest

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

CI decreases with time

CI becomes SI over time

CI remains constant over time

CI increases with time

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

Flat Rate Interest

Reducing Interest

Only Compound Interest

Simple and Compound Interest

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

Decrease in time

Decrease in rate

Both A and B

Increase in time

49. Which interest model is easiest to manually calculate?

Simple Interest

Reducing Balance Interest

Continuous Compound Interest

Compound Interest

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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

Simple and Compound Interest Test Online

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