compound
verb
, kəm-ˈpau̇nd, ˈkäm-ˌpau̇nd\
Definition of compound
(Entry 1 of 4)
compound
adjective
, käm-ˈpau̇nd, kəm-ˈpau̇nd\
Definition of compound (Entry 2 of 4)
compound
noun (1)
\
Definition of compound (Entry 3 of 4)
compound
noun (2)
\
Definition of compound (Entry 4 of 4)
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Other Words from compound
Verb
, kəm-ˈpau̇n- , ˈkäm-ˌpau̇n- \
adjective
Synonyms & Antonyms for compound
Synonyms: Verb
accelerate, add (to), aggrandize, amplify, augment, boost, build up, enlarge, escalate, expand, extend, hype, increase, multiply, pump up, raise, stoke, supersize, swell, up
Synonyms: Adjective
Antonyms: Verb
abate, decrease, de-escalate, diminish, downsize, dwindle, lessen, lower, minify, reduce, subtract (from)
Antonyms: Adjective
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Examples of compound in a Sentence
Verb
The interest is compounded at regular intervals. we compounded our error by waiting too long to call for helpAdjective
“Steamboat” is a compound noun. “I told him to leave and he left” is a compound sentence.
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From the Editors at Merriam-Webster
When Is It 'You and I' or 'You and Me'?
When Is It 'You and I' or 'You and Me'?
Some pronoun advice for you (and her and him and them).
Dictionary Entries near compound
Statistics for compound
Last Updated
6 Feb 2019
Look-up Popularity
Time Traveler for compound
The first known use of compound was in the 14th century
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More Definitions for compound
compound
verbFinancial Definition of compound
What It Is
In finance, to compound means to earn interest on principal plus interest that was earned earlier.
How It Works
You have $100 to open a savings account at XYZ Bank on January 1. The annual interest rate is 5%. How much will you have in five years?
Well, if the bank simply gave you 5% of your $100 at the end of the year, you would have $105 on December 31. If you left the $105 in the account to earn another 5% next year, at the end of that second year, you would have: $105 x 1.05 = $110.25. Not only did you earn interest on your original $100 in year two, you earned interest on year one's interest. That is, it compounded. If you carried this out another eight years, here's what your account might look like:
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At the end of 10 years, you would have $162.89 in the account just for doing nothing. But it gets better. The example above assumes the bank pays interest on the balance at the end of the year (that is, the interest compounded annually). In the real world, a bank would usually pay you interest on your account balance at the end of every month (that is, the interest compounds monthly). The bank simply divides the annual interest rate (5% in our case) by 12 months, and applies that rate to your balance at the end of each month. So in year one, let's see what happens:
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Notice that when the bank compounded the balance annually, you only had $105.00 at the end of year one. But if the bank compounds monthly, you have $105.12 at the end of year one. It may not sound like much, but consider the effect on a $500,000 beginning balance: At the end of 10 years, the investor has $814,447.13 if the interest compounds annually, but she has $823,504.75 -- a full $9,057.62 more -- if the interest compounds monthly.
Compounding doesn't just affect how much interest investors earn; it affects how much interest investors pay. For example, if that $1,000 savings account had really been a $1,000 loan to you from XYZ Bank, the amount of interest you pay would be influenced by how often the bank compounded the rate. The important lesson here is that the more frequently compounding occurs, the more interest is earned (or paid) on a balance. Some credit cards even compound interest daily, which greatly affects the borrower's balance owed.
Why It Matters
The financial world often refers to compounding as "magic" because it is one of the most fundamental ways to build wealth yet takes the least amount of effort. But because of the variety of interest calculation methods out there, borrowers should compare lender offers, and investors should compare investment offers by carefully reading the disclosure accompanying those offers. Investors are well served to understand how an institution’s choice of interest-calculation methods affect the amount of interest applied to the investor’s account. Depending on the anticipated activity, the borrower might save money and the investor might make more money by preferring one calculation method to another.
This InvestingAnswers story features a real-life example of how compounding can work for you: How One Normal Lady Turned $200 into $7 Million.
Source: Investing Answers
compound
verb
English Language Learners Definition of compound
(Entry 1 of 2)
compound
adjective
English Language Learners Definition of compound (Entry 2 of 2)
See the full definition for compound in the English Language Learners Dictionary
compound
verb
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Kids Definition of compound
(Entry 1 of 4)
compound
adjective
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Kids Definition of compound (Entry 2 of 4)
compound
noun
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Kids Definition of compound (Entry 3 of 4)
compound
noun
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Kids Definition of compound (Entry 4 of 4)
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compound
transitive verb
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Medical Definition of compound
(Entry 1 of 3)
compound
adjective
\
Medical Definition of compound (Entry 2 of 3)
compound
noun
\
Medical Definition of compound (Entry 3 of 3)
compound
transitive verb
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Legal Definition of compound
Note: Compounding a felony is a common-law crime.
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