Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. Join them; it only takes a minute:

Sign up
Here's how it works:
  1. Anybody can ask a question
  2. Anybody can answer
  3. The best answers are voted up and rise to the top

When the term 'interest rate' is used, by default does it mean compound interest unless specified otherwise?

At this link : they use the word 'interest' many times, so that got me wondering.

W.r.t the above link, 2 more questions:

Why such a huge difference between Registered minimum purchase and non-registered min purchase?
Under : Cashable GIC - Interest Paid Annually, for 2 years, the interest rate is 0.00?

share|improve this question
that is strange...interest rate of 0.00? Who invests in that and why? – Muro Apr 18 '11 at 17:54
Isn't 0.00 the same whether it's compound or simple? :-) – corsiKa Apr 18 '11 at 20:25
@Muro: 0% bonds are reasonable; they're of course sold at a discount. This is sensible in tax regimes without capital gain tax. Also, it reduces the administrative overhead, as there's no need to track bond ownership until maturity. – MSalters Apr 29 '11 at 10:21
If it is 0%..then there will be no what is the relevance of non-zero capital gains tax? – Victor123 Apr 29 '11 at 16:05
@Victor123: you could buy a zero coupon bond at discount, say at 80$, and then redeem it at maturity at 100$, thus having 20$ capital gains (taxable in a jurisdiction with capital gains tax). – Fab Apr 21 '14 at 18:00

Unless otherwise stated interest is always simple interest (non-compounding).

In the case of investments you are given the option of reinvesting earnings (turning it from simple interest to compounded interest).

share|improve this answer

Your Answer


By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.