Interest

AAA

DEFINITION of 'Interest'

1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

2. The amount of ownership a stockholder has in a company, usually expressed as a percentage.

Interest is commonly calculated using one of two methods: simple interest calculation, or compound interest calculation.

INVESTOPEDIA EXPLAINS 'Interest'

1. Lenders make money from interest, borrowers pay it.

2. Someone who holds more than 5-10% of the stock in a company is said to hold significant interest.

RELATED TERMS
  1. Gross Interest

    The annual rate of interest to be paid on an investment, security ...
  2. Accrued Interest Adjustment

    The extra amount of interest that is paid to the owner of a convertible ...
  3. Net Interest Margin

    A performance metric that examines how successful a firm's investment ...
  4. Funding Agreement

    A low-risk, fixed-income investment. A funding agreement offers ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when ...
  6. Compounding

    The ability of an asset to generate earnings, which are then ...
RELATED FAQS
  1. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ...
Related Articles
  1. Credit & Loans

    5 Keys To Unlocking A Better Credit Score

    Follow these tips and techniques to rebuild a ruined credit rating.
  2. Home & Auto

    Got A Good Mortgage Rate? Lock It Up!

    Rising rates mean rising profits for lenders, providing incentive to increase rates whenever possible.
  3. Investing Basics

    How Interest Rates Affect The Stock Market

    Whether you're buying lunch, a home or a stock, you're influenced by interest rates.
  4. Taxes

    Tax Deductions On Mortgage Interest

    If you're a homeowner, this is one item you want to understand and use on your return.
  5. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  6. Investing Basics

    Interest Rates And Your Bond Investments

    By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it.
  7. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.
  8. Investing

    Strategies To Position Your Bond Portfolio

    Fixed income investors may not be able to see them all right now, but important trends are stirring on the investment horizon.
  9. Savings

    How To Make Money With Airbnb: Risks & Rewards

    Airbnb lets you turn your home or spare room into extra cash. Here's how to make money and protect yourself from the risks.
  10. Mutual Funds & ETFs

    Consider This High-Yield ETF's Risks and Rewards

    Finding quality high-yield opportunities isn’t easy, but the YieldShares High Income ETF (YYY) has potential.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center