alleryStart learning →Compound interest is described in the example as interest on:
AInflation
BDividends
CInterest
DPrincipal
Answer & Solution
Correct answer: C. Interest
1. The nickname for compound interest says what it is.
2. Simple interest applies to year 1.
3. Compound interest applies to year 2.
4. Compound interest is described as interest on interest.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 7 'Time Value of Money I: Single Payment Value'_
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