Question

The time period for which the interest is calculated is called the
A. Market period
B. Cooling period
C. Conversion period
D. None of the above

Answer 1

Hint: First we try to analyze all the terms given in the options. Then we can check which of the options matches with the definition of the given options. Thus, by comparing we can find the correct answer.

Complete step-by-step answer:
If we talk about the market period we have, the period of time when the market value runs with the given value altogether and this is not the case here.
A cooling period is that when the money is kept safe somewhere without any interest or any deposit for a certain period of time. But that is not the case here.
And the period of time for which the interest is calculated is called the conversion period.
Hence, option (c) is correct.

Note: The interval of time between successive conversions of interest into principal is called the interest period or conversion period and is usually either three months, six months, or one year, in which cases interest is said to be compounded quarterly, semiannually, or annually respectively. Interest of a money is the money that the bank or borrower or financial institutions give to the depositor after a fixed period, usually a year. Interest amount will be a fixed percentage of the amount deposited. The amount deposited is called principal amount and the percentage of interest is called rate of interest. Rate of interest can be defined as the amount of interest per Rs. 100 deposited per year. The amount of interest can be calculated by taking the product of the principal amount, rate of interest and the number of years.