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What is interest?

What does the word interest mean in finance?
April 6, 2011


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Interest as a financial term means the amount a borrower has to pay for borrowed money. It is expressed as a percentage of the debt. If the debt is $1.000 and the interest rate is 5 % per year, the interest will be $50 for one year. Interest is calculated for the period of the loan. If the money is lent for 6 months, the interest will be $ 25.

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