The longer money can earn interest,
A) the greater the interest earned on the original deposit exceeds the interest-on-interest.
B) the greater the compounding effect.
C) the greater the present value must be to reach a financial goal.
D) the greater the risk to the investor of not reaching a financial goal.

Question

Quizplus · Accepted Answer

The longer money can earn interest, the more significant the compounding effect becomes. This is because interest is earned not only on the initial principal but also on the accumulated interest over time, leading to exponential growth of the investment.

The Longer Money Can Earn Interest