The process whereby the value of an investment increases exponentially over time is called the _________________.
A) Annual percentage rate
B) Time value
C) Annual percentage yield
D) Compounding

Question

Quizplus · Accepted Answer

The process described in the question is compounding, which is the process of earning interest on both the initial investment and the accumulated interest over time. Option A refers to an annual interest rate, option B refers to the concept that money has greater value in the present than in the future, and option C refers to the annual percentage yield, which takes into account compounding but does not describe the process of exponential growth over time.

The Process Whereby the Value of an Investment Increases Exponentially