The Notion of Compound Interest Means That

question 39

Multiple Choice

The notion of compound interest means that:

• A) if you leave a lump sum (some dollar amount) in the bank for some period, it will only accumulate interest on the principal (the original amount you deposited).
• B) if you leave a lump sum (some dollar amount) in the bank for some period, it will accumulate interest both on the principal and on any accumulated interest.
• C) any amount you borrow will accumulate more and more interest, no matter how much you pay back.
• D) the demand for loanable funds is upward-sloping.
• E) your interest will grow, but never at a rate higher than 13%.