Consider a two-year investment: Given a constant and positive interest rate,the interest earned in the second year will be greater than the interest earned in the first year (assuming annual compounding).

Question

Quizplus · Accepted Answer

This statement is true because the interest earned in the second year will be calculated on the original investment plus the interest earned in the first year, leading to a higher amount of interest earned in the second year.

Consider a Two-Year Investment: Given a Constant and Positive Interest