Interest

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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.

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