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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 419 809

Interest

The fee charged for a loan. The cost of borrowing money. The money you receive if you invest in a stock, bond, or Treasury. The money you receive when you make a loan.

For instance, banks pay interest on CD's (Certificates of Deposit) to attract investors. The money deposited by the purchaser of the CD is used by the bank to issue direct loans and to make various loan investments.

The interest the bank earns on its direct loans and other investments will enable them to pay the interest promised on the CD, on the promised due date (maturity).

In other words, the interest the CD holder receives is the bank's payment for the use of the deposited funds.

The same goes for Treasury Bills and Bonds, or any financial instrument that carries a sum of interest at maturity.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 419 809

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