The idea of compound interest refers to:
A) the payment of interest on previously earned interest.
B) investing for multiple periods in one year.
C) earning interest only on the initial investment.
D) changing interest rates during an investment.

Question

Quizplus · Accepted Answer

Compound interest refers to the accrual of interest on both the principal amount and any previously earned interest. This allows for the growth of an investment to accelerate over time as the interest earned increases.

The Idea of Compound Interest Refers To