The following points highlight the seven main causes of difference in interest rate. The causes are: 1. Differences in Risk 2. Period of Loan 3. Volume of Loan 4. Nature of Security 5. Financial Standing of the Borrower 6. Market Imperfection 7. Variation in Demand and Supply of Money. Cause # 1. Differences in Risk: Gross interest rates differ owing [...]
Let us make an in-depth study of Interest. Read this article to learn about-: 1. Meaning of Interest 2. Definition of Interest 3. Why Interest is Paid or Charged 4. Types of Interest 5. Elements of Gross Interest 6. Factors Influencing the Rate of Interest 7. Grounds in which Payment of Interest is Justified 8. Additional Information. Meaning of Interest: [...]
Interest: Definitions, Concept and Causes of Difference in Rates of Interest! In simple words, interest means the reward for the use of capital. It is also called the income of the owner of capital for lending it. In other words, it is the price paid by the borrower of money to its lender. Now, question arises, why interest is paid? [...]