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Compound Interest Calculated Each Compounding Period Establishes Values for the Amount of an Investment That Form a Geometric Sequence.

Question

Compound interest calculated each compounding period establishes values for the amount of an investment that form a geometric sequence. True False

Solution

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Answer

True.Compound interest means that interest earned in one period is added to the principal, and subsequent interest calculations are performed on the combined amount (principal plus interest). This leads to exponential growth, which is characteristic of a geometric sequence.