Answer: The statement is False.
Explanation: Compound interest as the name suggests is the interest compounded over time. In other words is can be defined as the interest we receive from banks on the interest already earned on our principal amount. To make it simple, let us say we have deposited $100 in a bank at 10% interest.
Then in year 1 our interest amounts to $10.
In year 2, the interest will be computed on $100 + $10 , that is the previous principal amount and the interest earned in year 1. So in this way, we get interest on interest already earned.
Thus, the above statement is false.
