Match each description to the type of financial situation it describes.

Group of answer choices

Only earns interest on the initial deposit


           [ Choose ]             Compound Interest             Annuity             Simple Interest             Amortized Loan             Payout Annuity         

Single initial deposit, but earns interest on principal and interest


           [ Choose ]             Compound Interest             Annuity             Simple Interest             Amortized Loan             Payout Annuity         

Interest on principal and interest, but with regular deposits


           [ Choose ]             Compound Interest             Annuity             Simple Interest             Amortized Loan             Payout Annuity         

Interest on principal and interest, but with regular withdrawals


           [ Choose ]             Compound Interest             Annuity             Simple Interest             Amortized Loan             Payout Annuity         

Buying a home


           [ Choose ]             Compound Interest             Annuity             Simple Interest             Amortized Loan             Payout Annuity         
 

Here are the descriptions and corresponding financial situations:

1. **Only earns interest on the initial deposit**  
   **Answer**: Simple Interest  
   - Simple interest is calculated only on the initial principal, not on accumulated interest.

2. **Single initial deposit, but earns interest on principal and interest**  
   **Answer**: Compound Interest  
   - Compound interest includes interest on the initial principal and on the interest already earned.

3. **Interest on principal and interest, but with regular deposits**  
   **Answer**: Annuity  
   - An annuity involves regular deposits and earns interest on both the principal and any accumulated interest.

4. **Interest on principal and interest, but with regular withdrawals**  
   **Answer**: Payout Annuity  
   - A payout annuity allows for regular withdrawals while continuing to earn interest on the remaining principal.

5. **Buying a home**  
   **Answer**: Amortized Loan  
   - An amortized loan is typically used for large purchases like homes, where the loan is paid off over time with regular payments that include both interest and principal.

Would you like more details or have any further questions?  

Here are 5 related questions:
1. What is the formula for calculating simple interest?
2. How does compound interest differ when compounded annually versus monthly?
3. What are the advantages of an annuity compared to a lump-sum investment?
4. How does a payout annuity help in retirement planning?
5. How is the monthly payment for an amortized loan calculated?

**Tip**: Compound interest grows faster than simple interest because it earns interest on interest!

Match each description to the type of financial situation it describes.

Explore various financial situations such as simple interest, compound interest, annuities, and amortized loans. Learn the key formulas and concepts with examples, ideal for students in Grades 9-12 interested in personal finance and mathematics.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation