THE TERM INTEREST IS DEFINED AS......
- The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
- The amount of ownership a stockholder has in a company, usually expressed as a percentage.
Notes:
So basically, when you open a savings account or cd at a bank, the interest they pay you is not a favor. They are paying you for the "privelege" (I like that word) of borrowing your money. The more you lend them, the more they pay you. I bet you'll think twice the next time you ask what the interest rate is on a savings account and the reply is .025%! Conversely, when you borrow money from the bank, the interest you pay them is for the "privelege" of borrowing their money. Yet somehow they always seem to charge you a lot more than .025% (go figure).
Interest can also refer to an investment. For example, if you bought 25 shares of Google stock and there were only a total of 100 shares in existence, then you would be said to hold a significant interest. You would also own 25% of Google and therefore be a Kabillionaire (that's probably not a word...but you get the idea).
- Lenders make money from interest, borrowers pay it.
- Someone who holds more than 5-10% of the stock in a company is said to hold significant interest.
So basically, when you open a savings account or cd at a bank, the interest they pay you is not a favor. They are paying you for the "privelege" (I like that word) of borrowing your money. The more you lend them, the more they pay you. I bet you'll think twice the next time you ask what the interest rate is on a savings account and the reply is .025%! Conversely, when you borrow money from the bank, the interest you pay them is for the "privelege" of borrowing their money. Yet somehow they always seem to charge you a lot more than .025% (go figure).
Interest can also refer to an investment. For example, if you bought 25 shares of Google stock and there were only a total of 100 shares in existence, then you would be said to hold a significant interest. You would also own 25% of Google and therefore be a Kabillionaire (that's probably not a word...but you get the idea).
