ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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____ is interest paid on interest previously earned.
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emergency fund
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interest account
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growing interest
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compound interest
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Explanation:
Detailed explanation-1: -Interest-on-interest, also referred to as ‘compound interest’, is the interest that is earned when interest payments are reinvested.
Detailed explanation-2: -Compound interest, as stated above, earns interest on the principal as well as the interest earned in prior periods.
Detailed explanation-3: -Interest can be calculated in two ways: simple interest or compound interest. Simple interest is calculated on the principal, or original, amount of a loan. Compound interest is calculated on the principal amount and the accumulated interest of previous periods, and thus can be regarded as “interest on interest.”
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