is interest that is paid not only on the principal, but also on any interest earned but not withdrawn during earlier periods.
A)basic interest
B)simple interest
C)future interest
D)compound interest

Question

Quizplus · Accepted Answer

Compound interest is interest that is paid not only on the principal but also on any interest earned but not withdrawn during earlier periods. As a result, the interest grows at an exponential rate, much faster than simple interest (option B, which is interest only on the principal). Option A, basic interest, is not a common financial term, and option C, future interest, refers to interest that will be paid at a future date, rather than the current interest that has accumulated.

Is Interest That Is Paid Not Only on the Principal