What is the rule of 72?
A)Individuals over the age of 72 should invest in fixed-income securities exclusively.
B)Investments double in value once every 72 compounding periods.
C)The time until investments double in value is equal to the annual interest rate divided by 72.
D)The time until investments double in value is equal to 72 divided by the annual interest rate.
E)None of the above.

Question

Quizplus · Accepted Answer

The rule of 72 is a simple formula used to estimate the number of years required to double the invested money at a given annual rate of return. By dividing 72 by the annual rate of interest, investors can get a rough estimate of how many years it will take for their initial investment to double.

What Is the Rule of 72