Question

When you reinvest your interest and it starts generating its own interest, you are benefiting from what?

A.Inflation
B.Exchange rates
C.Compound interest
D.Annual interest

Answer 1

When you reinvest your interest and it starts generating its own interest, you are benefiting from compound interest.

>Compound interest is also termed as compounding. Compounding is the ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.

Letter C is the answer.

Answer 2

Answer: (C) Compound interest

Step-by-step explanation:

The compound interest is mainly calculated on the principle of interest and the amount. When we reinvest the given interest then it automatically starts generating the own interest and we are benefiting from the compound interest.

The compound interest is basically determined by increasing the underlying initial principle by one or more the yearly financing cost raised to the quantity of compound periods short one. The all out starting measure of the advance is then subtracted from the subsequent worth.