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What does "compound interest" mean?...

What does "compound interest" mean?

A.

Earning interest only on the principal

B.

Earning interest on both the principal and previously earned interest

C.

The interest charged on loans

D.

The annual fee for savings accounts

E.

The fixed return on investments

Correct answer is B

Compound interest is calculated on both the principal and the previously earned interest, allowing investments to grow faster.