Compounding is the process of:
A)additional interest being paid on interest that has already been earned.
B)adding the percentage of interest times your initial principal yearly.
C)deposits steadily increasing a set amount annually.
D)None of these are true.

Question

Quizplus · Accepted Answer

Compounding refers to the process where the interest earned on an investment is reinvested, so that in future periods, interest is earned on the initial principal as well as the reinvested interest. This leads to exponential growth of the investment over time.

Compounding Is the Process Of