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Interest

Interest

Fee paid by the debtor to the creditor for temporarily borrowed capital

Interest is the cost of borrowing capital. It is usually measured with the interest rate, defined as "the amount a lender charges for the use of assets expressed as a percentage of the principal," where the principal denotes the value of loaned assets at the start of the loan.

Interest as a payment is instituted due to time preference: One prefers to have money now rather than in the future, and thus interest becomes one's compensation depending on how much one values the current money in relation to future money. For entrepreneurs and investors, the current money may have an especially high value, as they could utilize it for investments for future income streams. On the loan market, however, the interest rate (or price for borrowing) tends to be set by the supply and demand of loanable funds (i.e. money available to borrow from).

The kind of interest rate described hereto that's solely based upon time preference is called the pure interest rate. Usually, however, other factors also play in, and the interest rate with these included is denoted as the nominal interest rate. Such factors may be inflation or the debtor's risk of default. Younger people may, for instance, have to pay a higher interest rate than many adults, not necessarily because of age discrimination, but because adults tend to have a lengthier credit record to judge from than youngsters, and there are thus more uncertainty as to their likelihood of repaying on time.

Inflation makes an important impact on the interest rate. In addition to the interest rate being set by time preference, one also needs to predict how much the value of the currency will fall during the period of the loan. If one sets it too low, one will likely incur losses; while if one sets it too high in comparison to the current market, one may not find many willing borrowers. In order for statisticians to measure the time preference part of interest, inflation is usually adjusted for, making it the real interest rate.

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September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
Simon Johnson
December 18, 2019
IN
When bailiffs came knocking earlier this year, it was the first time Kaddi Bah realised the four-room Stockholm apartment she shared with her sister and another friend was being illegally sub-let.
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
Press Trust of India
November 22, 2019
@bsindia
Read more about National Stock Exchange to introduce interest rate options from December 9 on Business Standard. Interest rate options are financial derivative contract whose values are based on rupee interest rates.
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
IANS
November 11, 2019
@bsindia
Read more about Air India stake sale: Roadshow in Singapore this week to woo bidders on Business Standard. The national carrier has a debt of Rs 57,000 crore and the bids will be invited for 100 per cent stake
Daniel Ziffer
November 8, 2019
ABC News
The heads of Australia's two biggest banks front a parliamentary inquiry and mount a vigorous defence of the practice of charging longstanding customers higher rates for home loans compared to new customers walking in off the street.
Nandish Shah
November 8, 2019
@bsindia
Read more about Derivatives strategy on ITC by Nandish Shah of HDFC Securities on Business Standard. Short covering is seen in the ITC Futures' during the November series till now, where we have seen fall in Open Interest with price rising by 3%.
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
BS Reporter
September 24, 2019
@bsindia
Read more about NSEL case: SC admits EOW's appeal against 63 Moons Technologies order on Business Standard. The SC will hear the case on 27 November. However, the apex court has said that status quo will continue
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
PTI
September 20, 2018
https://www.oneindia.com
The government has raised interest rates on small savings schemes, including NSC and PPF, by up to 0.4 per cent for the October-December quarter
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