The financial calculation where interest is earned on both the principle and previously earned interest is known as .....

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The financial calculation where interest is earned on both the principle and previously earned interest is known as ____

A	simple interest
B	true interest
C	compounding
D	variable interest

Explanation:

Detailed explanation-1: -Compound interest is the interest on a deposit calculated based on both the initial principal and the accumulated interest from previous periods. Or, more simply put, compound interest is interest you earn on interest . You can compound interest on different frequency schedules such as daily, monthly or annually.

Detailed explanation-2: -Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.

Detailed explanation-3: -Compound interest is interest calculated on an account’s principal plus any accumulated interest. If you were to deposit $1, 000 into an account with a 2% annual interest rate, you would earn $20 ($1, 000 x . 02) in interest the first year.

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