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The process of reinvesting interest earned to generate additional earnings over time is ________. compounding discounting annuity lump-sum

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sakshigupta4990

The process of reinvesting interest earned to generate additional earnings over time is compounding.

Option A. compounding.

Compound interest, simply put, is interest on interest and helps your investment grow faster. By reinvesting your dividends, you give your shares the potential to earn more dividends in the future.

Compound interest is a method of calculating total interest on principal by reinvesting the interest earned. For investors, wealth or capital grows exponentially. Similarly, applying compound interest to liability such as debt would be a heavy burden for the debtor.

Reinvesting interest is the practice of purchasing additional shares or units using dividends, interest, or other forms of distribution of income earned on investments, rather than receiving distributions in cash.

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