The concept of compound interest refers to:
A) earning interest on the original investment.
B) payment of interest on previously earned interest.
C) investing for a multiyear period of time.
D) determining the APR of the investment.

Question

Quizplus · Accepted Answer

Compound interest is the payment of interest on previously earned interest. This means that as the interest accrues and is added to the principal, the interest earned in subsequent periods grows. This can significantly increase the overall return on an investment over time.

The Concept of Compound Interest Refers To