The Concept of Compound Interest Refers To

question 69

Multiple Choice

The concept of compound interest refers to:

• A) earning interest on the original investment.
• B) payment of interest on previously earned interest.
• C) investing for a multiyear period of time.
• D) determining the APR of the investment.

---

Definitions:

8% Bond

A bond that pays an annual interest rate of 8% on its face value, typically issued by corporations or governments as a form of debt financing.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, taking into account its current market price, par value, coupon interest rate, and time to maturity.

6 ¾% Bond

A bond that pays an annual interest rate of 6.75% to its holder, typically issued by governments or corporations.

Yield To Maturity

Yield to maturity is the total return anticipated on a bond if the bond is held until it matures, considering all interest payments and the principal repayment.