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. Debit Spread

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

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center