The process of accumulating interest on an investment over time to earn more interest is called:
A) Growth.
B) Compounding.
C) Aggregation.
D) Accumulation.
E) Discounting.

Question

Quizplus · Accepted Answer

Compounding refers to the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes. This concept is key to the idea of interest on interest, allowing investments to grow at a faster rate.

The Process of Accumulating Interest on an Investment Over Time