Compounding refers directly to
A)finding the present value of a future sum of money.
B)finding the future value of a present sum of money.
C)changes in the interest rate over time on a bank account or a similar savings vehicle.
D)interest being earned on previously-earned interest.

Question

Quizplus · Accepted Answer

Compounding refers to interest being earned on previously-earned interest. It is the process of adding interest to the principal amount, which results in earning interest on the interest. This can occur in a savings account, investment account, or loan.

Compounding Refers Directly to