The Principle of Compounding Implies That

question 2

Multiple Choice

The principle of compounding implies that:

• A) we should diversify enough so that the returns on different stocks will be the same at some time in the future.
• B) any difference in the rate of investment returns will stay constant over time.
• C) a small difference in the rate of investment returns makes no difference over a long period.
• D) a small difference in the rate of investment returns can have a large difference over a long period.

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Definitions:

Pakicetus

An extinct genus of early whales living in the Eocene epoch, illustrating a significant stage in the transition from land to sea creatures.

Modern-day Whales

Current species of whales that descended from land-dwelling ancestors through a series of evolutionary transitions over millions of years.

Hippopotamus

A large, mostly herbivorous mammal native to sub-Saharan Africa, known for its large size, semi-aquatic habits, and aggressive nature.

Hemagglutinins

Proteins found on the surface of certain viruses, like influenza, that enable the virus to bind to and infect host cells.