Simple Interest and Compound Interest for Bank Exams
By : Akash Mishra
Updated : Oct 5, 2020, 18:26
In most of the banking exams like IBPS Clerk, PO, SBI Clerk, PO, IBPS RRB Clerk, PO, RBI Grade A, B, NABARD Grade A & B, LIC AAO, Simple and Compound Interest questions are always there as it is one of the most important parts of banking examination. Understanding the concept of simple and compound interest can prove to be of great help in clearing bank exams with ease. Simple interest and compound interest problems in bank exams are easy to solve but need sheer practice and daily revision.
Important Simple Interest and Compound Interest Topics, Formula for Bank Exams
Simple interest is a popular method of calculating interest for any loan or principal amount and is mostly used in the automobile, banking, and finance sectors. The formula for simple interest is:
Simple Interest = (Principal x Interest rate x Time ) /100
Compound interest is a method used for calculating the interest on the principal amount and the interest accumulated over time.
The formula for calculating compound interest is:
Compound interest = Amount – Principal
But, when the principal amount taken is compounded yearly, then the amount is
Amount = Principal (1+ Interest rate /100)time (in years)
Tips to Solve/Prepare Simple Interest and Compound Interest Questions in Bank Exams
- Suppose a sum of money becomes 5 times in 10 years at SI. What will be the rate of interest?
R = 100 (n-1)/T%
R= 100 (5-1)/10
- When compound interest is calculated on a half-yearly basis, then Rate % becomes Rate/2% and time is 2n. For eg. – A = Px [ 1+ (2x100)2n
- The best way to calculate the difference between the simple interest and compound interest over two years is – P(r/100)2
- Suppose the rates are different every year, the amount will get calculated in the following way - P [(1+ R1)/100] P [(1+ R2)/100] P [(1+ R2)/100] and so on.
Importance of Simple Interest and Compound Interest Section in Banking Exams
- The simple interest and compound interest sections are one of the most tricky and logical parts of banking exams as one cannot just do guesswork; instead, a strong understanding of the topic is required to clear the bank exams.
- Since it's an essential section in bank exams, scoring good marks can help in improving the overall score in the exam.
- A good understanding of simple interest and compound interest helps in the data interpretation section of bank exams, that is one of the toughest and scoring topics.
- Preparing simple interest and compound interest topics well are essential as it is an essential part of bank operations as banks' interest on the loan is a primary source of income and helps them to operate on a profitable basis.
Most Recommended Best Books for Simple Interest and Compound Interest
Some of the important books that cover simple interest and compound interest topics for bank exams are -
Name of the Books
Comprehensive Guide to IBPS Bank PO/ MT Preliminary & Main Exams
IBPS: PO/MT (Preliminary Exam) Previous Years & Practice Test Papers (Solved)
Why Prepare for Simple Interest and Compound Interest Questions from Gradup?
BYJU'S Exam Prep is one of the best examination platforms in India for banks, SSC, and various other competitive exams preparations. It also offers test series that are designed by eminent experts and contain detailed solutions and performance analysis. To serve the students better, we conduct interactive live sessions, quizzes, and tests for a better understanding of the subject. The best part is that study materials are available in both languages - English & Hindi. BYJU'S Exam Prep has Simple Interest & Compound Interest notes for bank exams, Simple Interest & Compound Interest online test for bank exams, Simple Interest & Compound Interest syllabus for bank exams, etc. Experts are always available to guide and help the students by discussing their doubts and addressing their queries effectively.
Bank employees enjoy a good salary and get lots of perks and other benefits. A bank job is always considered prestigious as its mark of hard work and vigour. Indeed, it's a rewarding career. Study simple interest & compound interest question and answers PDFs for bank exams on a daily basis as it helps to memorize the formulas.
Frequently Asked Questions (FAQs)
- Is Simple Interest the same as compound interest?
Simple Interest is calculated based on principals and the initial amount of load, whereas Compound Interest is calculated on principals and the initial amount plus accumulated interest of the period.
- How do you solve a Simple Interest problem?
By using the simple interest formula-
Simple Interest = (Principal x Interest Rate x Time)/100
- Can one study Simple Interest and Compound Interest through an online course?
Yes, Gradup provides exceptionally well online courses for studying Simple Interest and Compound Interest.
- Which is the best book for studying Simple Interest and Compound Interest?
Comprehensive Guide to IBPS Bank PO/ MT Preliminary & Main Exams is one of the best books to study Simple Interest and Compound Interest from.
- Do banks use Simple Interest and Compound Interest?
Banks use both depending on the loan. So, it varies from case to case.
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