Compound interest describes increases in value when interest is paid, or compounded, on
A) only the original amount invested.
B) only the previously accumulated interest payments.
C) the original amount invested and previously accumulated interest payments.
D) the original amount invested minus any previously accumulated interest payments.

Question

Quizplus · Accepted Answer

Compound interest involves earning interest not only on the original amount invested but also on any previously accumulated interest payments. This leads to exponential growth in the value of the investment over time.

Compound Interest Describes Increases in Value When Interest Is Paid