Only The Most Financially Savvy Can Pass This Monetary Terms Quiz

Karyn Bailey|General Knowledge|13 Jan 2020

What is compounding?

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Stack of twenty dollar bills sit in a factory machine.
Retry Correct Incorrect Compounding is sometimes considered an interest on interest. That’s because the interest rate applies to both the principle and the interest that has since accumulated. Compounding occurs at a set period, such as monthly or continuously.
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Ricky Carioti/The Washington Post via Getty Images
Ricky Carioti/The Washington Post via Getty Images

What is compounding?

  • Interest on the principle
  • Linear growth
  • Interest on interest
  • Decreasing value of an asset
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