Compound Interest Means That You Earn

question 158

Multiple Choice

Compound interest means that you earn:

• A) Interest only on the initial amount invested.
• B) Interest on the initial principal only.
• C) Interest on both the principal and prior reinvested interest.
• D) A decreasing amount of interest each year.
• E) The same amount of interest each year.

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Definitions:

Principal

The primary party involved in a transaction or contract, or the amount of money originally invested or loaned, before interest.

Agent

An individual or entity authorized to act on behalf of another (the principal) in legal or business matters.

Manifestations

Manifestations refer to displays or expressions of an act, event, or condition, revealing the presence or existence of something.

Reasonable Understanding

A standard determining what a typical person would comprehend in a given set of circumstances.