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Assertion (A): Compound interest is always greater than simple interest for the same principal, time, and rate. Reason (R): Compound interest adds int
Question

Assertion (A): Compound interest is always greater than simple interest for the same principal, time, and rate.

Reason (R): Compound interest adds interest to principal periodically, thereby earning interest on interest.

A.

Both A and R are true, and R is the correct explanation of A

B.

Both A and R are true, but R is not the correct explanation of A

C.

A is true, but R is false

D.

A is false, but R is true

Correct option is A

Solution:
Assertion (A) is TRUE. For the same principal, rate, and time, compound interest (CI) ≥ simple interest (SI). They become equal only when time = 1 year or rate = 0%.
Reason (R) is TRUE. Compound interest works by adding interest to principal at regular intervals (annual, semi-annual, etc.), which creates interest on interest — the reason why CI > SI.
R correctly explains A.
Correct Answer: (a)

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