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Federal Reserve Banks as well as the Federal government like to calculate simple interest based on: (Points : 2) Exact interest, ordinary interest Using 30 days in each month Using 31 days in each month Exact interest None of these

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IT calculates simple interest based on Exact Interest. Unlike the ordinary interest method, Interest is not calculated on a 360 days basis, but by using the exact number of days in a year.
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The correct answer is A) Exact interest.

Federal Reserve Banks as well as the Federal government like to calculate simple interest based on exact interest.

The exact interest in the United States is the interest that is paid based on 365 days of banking operations. It is different than the ordinary interest that takes 360 days of calculation. Those five days of difference represent a considerable sum of money when we are talking about large operations. That is why Federal Reserve Banks as well as the Federal government like to calculate simple interest based on exact interest.

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