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

At this link : http://www.rbcinvestments2.com/actiondirect/remote_fixedrates.html 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?

Turukawa
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Victor123
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  • that is strange...interest rate of 0.00? Who invests in that and why? – Muro Apr 18 '11 at 17:54
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    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 gains...so 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

1 Answers1

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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).

Frazell Thomas
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