Explain What Compounding Is and the Relationship Between Compound Interest

question 243

Essay

Explain what compounding is and the relationship between compound interest earned and the number of years over which an investment is compounded.

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Definitions:

Price Inelastic

Describes a situation where the demand for a product does not significantly change with a change in its price.

Price Volatile

Referring to how quickly and to what extent the price of a commodity or asset can change within a short period of time.

Elastic

Describes a situation in economics where the demand or supply of a good or service is sensitive to changes in price.

Necessity

An indispensable requirement or need for something; often something that is essential for survival or to carry out a specific task.