Which of the following represents unpaid interest that is added to the principal?

The correct choice reflects the concept of deferred interest, which represents interest that has not been paid when it was due and instead is added to the principal balance of a loan. This can occur in various financial agreements, where the borrower may not make interest payments during certain periods, thereby increasing their overall debt. This addition inflates the principal amount on which future interest accrues, potentially leading to a larger total repayment amount over the life of the loan.

Prepaid interest is a different concept where interest payments are made in advance for a specific period, thereby reducing the amount of interest that will accrue in the future. Fixed interest refers to an interest rate that remains constant throughout the duration of a loan, providing predictability in payments, while compound interest involves calculating interest on both the initial principal and the accumulated interest from previous periods, but does not specifically signify unpaid interest being added to the principal.