Fintech Mock Interview
Practice 25 Fintech interview questions covering payments, blockchain, regulation, and digital banking innovation.
Question 16 of 25
Tell me what you know about compound interest and the time value of money.
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Applying for a job in the fintech space means you need to be prepared for interview questions about financial concepts and terminology. Although the interviewer won't expect you to be an expert, they will be looking for you to be able to define and explain most terms and concepts. Prior to the interview, brush up on financial basics and be prepared to discuss them.
"Compound interest refers to how interest increases exponentially over time. This might be the interest associated with a loan, bank account, or investment, and the interesting thing is how it compounds exponentially rather than linearly. This is why I think it's so important to reinvest dividends on an investment, because over time the reinvested dividends will compound along with the initial investment, causing your returns to grow drastically. The time value of money, on the other hand, is the concept that money you have now is worth more than the same amount of money in the future because of its potential earning capacity. In other words, because money can earn interest, it is worth more the sooner it is received."
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