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. Accrued Interest

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

    The ability of an asset to generate earnings, which are then ...
  5. Funding Agreement

    A low-risk, fixed-income investment. A funding agreement offers ...
  6. Net Interest Margin

    A performance metric that examines how successful a firm's investment ...
Related Articles
  1. 5 Keys To Unlocking A Better Credit ...
    Credit & Loans

    5 Keys To Unlocking A Better Credit ...

  2. Got A Good Mortgage Rate? Lock It Up!
    Home & Auto

    Got A Good Mortgage Rate? Lock It Up!

  3. How Interest Rates Affect The Stock ...
    Investing Basics

    How Interest Rates Affect The Stock ...

  4. Tax Deductions On Mortgage Interest
    Taxes

    Tax Deductions On Mortgage Interest

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center