What is Interest?

The Interest Rate is the sum that a lender charges its borrower for the use of its assets. The amount charged depends on the principal. Simply put, the interest rate is the extra amount of money that a borrower is expected to add to the original money its lender gave to them.


Another definition of interest is that it is the percentage sum that a company's shareholder is entitled to at a particular period depending on its shares. For example, let's assume that a shareholder has $100,000 worth of shares in a company and he is entitled to 2% at the end of the year; it means that at the end of the year, he will be paid $2,000 while his money will remain $100,000.


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