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Test Your Knowledge

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What is Compound Interest?

Question 1:


What is compound interest?

A. Interest earned only on the initial principal


B. Interest earned on both the initial principal and the accumulated interest


C. Interest earned on the initial principal and quarterly reinvestments

Question 2:


Which of the following is NOT a key factor that influences the growth of compound interest?

A. Initial investment (principal)


B. Interest rate


C. Inflation rate

Question 3:


In compound interest, what happens to the value of the investment over time?

A. It decreases as interest is paid out


B. It grows exponentially as interest is reinvested


C. It remains constant because of the fixed interest rate

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