UGC NET Questions (Paper – 1)

A, B and D correctly explain fundamental ideas about simple and compound interest. Simple interest remains based on the original principal, compound interest periodically adds interest to principal to generate interest-on-interest, and increasing compounding frequency (for the same nominal rate and duration) increases the final amount. Statement C is wrong because compound interest for the same principal, rate and time is greater than or equal to simple interest, not less, and E is wrong because rate and time are central factors in every interest formula. Hence the set A, B and D only is the correct combination of true statements.

Option A:
Option A includes A and B but omits D, thereby ignoring the important effect of compounding frequency on the final amount. Although it contains two true statements, the absence of D means it does not cover all correct information listed.

Option B:
Option B selects B and D but leaves out A, failing to mention the defining feature of simple interest, namely that it is calculated only on the original principal. Without A, understanding of the contrast between simple and compound interest is incomplete.

Option C:
Option C is incorrect because it includes E, which wrongly claims that rate and time are irrelevant, and excludes B, one of the key statements about compound interest. The presence of a clearly false statement makes this option invalid.

Option D:
Option D is correct since it groups the three true statements that cover simple interest behaviour, the nature of compounding and the effect of compounding frequency, while excluding C and E, both of which misrepresent interest calculations.