Question

If the number of conversion period is greater than or equal to 2 then the correct relation is ______.

Options

• C.I. > S.I.

• C.I. = S.I.

• C.I. < S.I.

• None of these

Answer 1

If the number of conversion period is greater than or equal to 2 then the correct relation is C.I. > S.I..

Explanation:

• Compound Interest (C.I.) is always greater than Simple Interest (S.I.) when the number of periods (years or conversion periods) is 2 or more because compound interest calculates interest on the accumulated interest from previous periods as well as on the principal.
• For one period, C.I. and S.I. may be equal, but when the interest is compounded for 2 or more periods, the interest earned on interest causes C.I. to exceed S.I.