Home > Investing Basics > Beginner
Investing Basics Beginner: Make Compound Interest Work for You

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Which of the following is used in the formula for determining compounded interest?
Choose wisely. There is only one correct answer.
All of the above. Principal, rate of return, and time periods are used in the compounding formula.
2.
By investing often while you earn compound interest, you can increase your total return. This is possible because frequent investing increases your _______.
Choose wisely. There is only one correct answer.
Principal. Frequent investing adds to the size of your principal, thus magnifying your return.
3.
Compound interest is _______.
Choose wisely. There is only one correct answer.
Interest paid on both interest earned and principal. Because of the way compound interest works, your earnings grow faster than they would by simple interest alone.
4.
The _______ you invest your money, the _______ compounding can work for you.
Choose wisely. There is only one correct answer.
Earlier / More. Compounding expands your money greatly over time.
5.
Interest paid on savings accounts and bonds is generally taxable.
Choose wisely. There is only one correct answer.
True. Interest paid on savings accounts and bonds is generally taxable.