Question

the earning of interest on interest over time is called
○ an annuity.
○ compounding.
○ an ordinary annuity.
○ present value.

Explanation:

• An annuity is a series of equal periodic payments, not interest on interest.
• Compounding is the process of earning interest on both the initial principal and the accumulated interest over time, which matches the definition.
• An ordinary annuity is a type of annuity where payments are made at the end of each period, not related to interest on interest.
• Present value is the current worth of a future sum of money, not the earning of interest on interest.

Answer:

compounding.