Interest Rate
An interest rate - aka
rate of return is compensation received by and for lending money.
Most commonly we know about interest rates from
bank or
checking account deposits; in return for
lending the bank
money -
making a deposit - we receive compensation for our
loan.
This compensation is known as the
interest rate.
There are two main ways that we are able to
calculate the amount of compensation received;
simple interest and
compound interest.