Question

Tomas earned $89 in interest on his savings account last year and has decided to leave...

Tomas earned $89 in interest on his savings account last year and has decided to leave the $89 in his account this coming year so it will earn interest. This process of earning interest on prior interest earnings is called:

A. Discounting

B. Duplicating

C. Indexing

D. Compounding

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Answer #1

Answer:Compounding

The process of earning interest on prior interest earnings is called compounding.The compounding period may vary and maybe annual ,quarterly ,monthly etc.

Other options explained

Discounting

False.From a finance perspective it refers to the process of determining the present value of an amount .

Duplicating

False.Refers to the repetition of a transaction for example a payment that has already been made.

Indexing

False.From an investment perspective indexing refers to the process of creating a portfolio that reflects the performance of a market index

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