The process of accumulation that occurs when interest is paid on previously earned interest is called:
A)present valuation.
B)backdating.
C)compounding.
D)front loading.

Question

Quizplus · Accepted Answer

Compounding is 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 is often referred to as "interest on interest," and is the basis of the compound interest calculation.

The Process of Accumulation That Occurs When Interest Is Paid