Question 1

What is a Fixed Deposit?

Accepted Answer

A Fixed Deposit (FD) is a financial instrument provided by banks which offers a higher rate of interest than a regular savings account, until the given maturity date.

Question 2

What is the formula for FD maturity?

Accepted Answer

The FD maturity formula is A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the compounding frequency, and t is the time in years.

Question 3

Which compounding frequency gives the best returns?

Accepted Answer

More frequent compounding (e.g., monthly or quarterly) generally yields slightly higher returns compared to annual compounding, as interest is reinvested more often.