When the Interest Paid on the Initial Principal Also Collects

question 7

Multiple Choice

When the interest paid on the initial principal also collects interest, this is called

• A) initial interest.
• B) simple interest.
• C) compound interest.
• D) present value interest.

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Definitions:

Escalating Commitments

The phenomenon where individuals or organizations continue to invest time, money, or resources into a failing course of action due to the amount already invested.

Setting Limits

Establishing and enforcing rules or boundaries that govern acceptable behavior and actions.

Involvement

The degree of interest and personal relevance a person finds in a particular situation or activity.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method or decision.