Compounding:
A)Calculates interest periodically
B)Looks into the present when the future is known
C)Is done only on an annual basis
D)Results in less interest than simple interest
E)None of these

Question

Quizplus · Accepted Answer

Compounding calculates interest periodically, meaning that interest is added to the principal regularly, which results in higher interest compared to simple interest. Option B is incorrect because compounding is done looking into the future, not the present when the future is known. Option C is incorrect because compounding can be done on any time basis, not just annually. Option D is incorrect because compounding results in higher interest compared to simple interest. Option E is incorrect because at least one option is correct.