Question 1

What is compound interest?

Accepted Answer

Compound interest is interest calculated on the principal plus accumulated interest from previous periods.

Question 2

Why is compound interest important?

Accepted Answer

Compound interest accelerates wealth growth over time, making it crucial for long-term investments and savings.

Question 3

What is the compound interest formula?

Accepted Answer

A = P(1 + r/n)^(nt), where A is final amount, P is principal, r is rate, n is compounding frequency, and t is time.

Question 4

How often is interest typically compounded?

Accepted Answer

Interest can be compounded daily, monthly, quarterly, semi-annually, or annually, depending on the financial product.

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