Question

______ interest is paid on the amount of the original deposit plus any interest the account has earned.

A. Annual
B. Simple
C. Periodic
D. Compound
Please select the best answer from the choices provided
Ο Α
OB
ОС
OD

Answer 1

D. Compound interest is paid on the amount of the original deposit plus any interest the account has earned. This means that the interest is calculated not only on the initial amount deposited, but also on the accumulated interest over time.

Step-by-step explanation:

The correct answer is D. Compound. Compound interest is paid on the amount of the original deposit plus any interest the account has earned. This means that the interest is calculated not only on the initial amount deposited, but also on the accumulated interest over time. As a result, the account balance grows at an increasing rate.

For example, if you deposit $100 into a bank account with compound interest at a rate of 5% per year, at the end of the first year, you would have $105 (the original $100 plus $5 in interest). In the second year, the 5% interest is calculated on $105, resulting in an additional $5.25. The interest earned each year is added to the account balance and becomes part of the next year's calculation.