Question

3.
allows you to earn interest on interest
(a) Simple interest (b) Compound interest
(c) Principle
(d) None of these​

Answer 1

Interest-on-interest, also referred to as 'compound interest', is the interest that is earned when interest payments are reinvested. Interest-on-interest is primarily used in the context of bonds, whose coupon payments are assumed to be re-invested and held until the bond is sold or matures.