**Interest** is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds.

When money is borrowed, interest is typically paid to the lender as a percentage of the principal, the amount owed to the lender. The percentage of the principal that is paid as a fee over a certain period of time (typically one month or year) is called the interest rate. A bank deposit will earn interest because the bank is paying for the use of the deposited funds. Assets that are sometimes lent with interest include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is calculated upon the value of the assets in the same manner as upon money.

Interest is compensation to the lender, for a) risk of principal loss, called credit risk; and b) forgoing other investments that could have been made with the loaned asset. These forgone investments are known as the opportunity cost. Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to pay for them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege. In economics, interest is considered the price of credit.

Interest is often compounded, which means that interest is earned on prior interest in addition to the principal. The total amount of debt grows exponentially, most notably when compounded at infinitesimally small intervals, and its mathematical study led to the discovery of the number *e*. However, in practice, interest is most often calculated on a daily, monthly, or yearly basis, and its impact is influenced greatly by its compounding rate.

Read more about Interest: History of Interest, Market Interest Rates, Interest in Mathematics, Formulae

### Other articles related to "interest":

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**Interest**- Formulae

... a loan with regular monthly payments is augmented by the monthly

**interest**charge and decreased by the payment so , where i = loan rate/100 = annual rate in decimal form (e.g ... the monthly payment of a loan An

**interest**-only payment on the current balance would be ... The total

**interest**, IT, paid on the loan is ...

**Interest**Rate Market

... The ASX

**interest**rate market is the set of corporate bonds, floating rate notes, and bond-like preference shares listed on the exchange ... way as ordinary shares, but the ASX provides information such as their maturity, effective

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... the intuition behind the Fisher equation is the relationship between nominal and real

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**Interest**Rate Future - STIRS

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### Famous quotes containing the word interest:

“My neighbors tell me of their adventures with famous gentlemen and ladies, what notabilities they met at the dinner-table; but I am no more interested in such things than in the contents of the Daily Times. The *interest* and the conversation are about costume and manners chiefly; but a goose is a goose still, dress it as you will.”

—Henry David Thoreau (1817–1862)

“If property had simply pleasures, we could stand it; but its duties make it unbearable. In the *interest* of the rich we must get rid of it.”

—Oscar Wilde (1854–1900)

“There is a blessed necessity by which the *interest* of men is always driving them to the right; and, again, making all crime mean and ugly.”

—Ralph Waldo Emerson (1803–1882)