Interest FAQs:


Q: Is interest payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum?

A: Yes, It is distinct from a fee which the borrower may pay the lender or some third party.

Q: Is interest received by a lender?

A: Yes, and whereas profit is received by the owner of an asset, investment or enterprise.

Q: Is interest considered the price of credit?

A: Yes, and therefore, it is also subject to distortions due to inflation.

Q: Was interest the result of the urbanized?

A: Yes, and economically developed character of the societies that produced them, the new Jewish prohibition on interest showed a pastoral, tribal influence.

Q: Was interest no longer viewed in the same manner?

A: Yes.

Q: Is interest earned on prior interest in addition to the principal?

A: Yes.

Q: Is interest paid out of each payment and so should not be compounded and an annual rate of 12·r would make more sense?

A: Yes.

Q: Is interest 12 per year?

A: Yes.

Q: Is interest compensation for the time the lender forgoes the benefit of spending the money?

A: Yes.

Q: Is interest the price of credit?

A: Yes, and it plays the role of the cost of capital.

Q: Is interest computed and added twice in the year?

A: Yes, and the $1 is multiplied by 1.5 twice, yielding $1.00×1.52 = $2.25.

Q: Is interest most often calculated on a daily?

A: Yes, and monthly, or yearly basis, and its impact is influenced greatly by its compounding rate.

Q: Is interest wrong because it amounts to "double charging"?

A: Yes, and charging for both the thing and the use of the thing.

Q: Is interest equal to the interest amount paid or received over a particular period divided by the principal sum borrowed or lent?

A: Yes.

Q: Is interest prohibited?

A: Yes, as well as making money out of money is unacceptable.

Q: Is interest usually much higher than the original interest rate since it is reflecting the aggravation in the financial risk of the borrower?

A: Yes.

Q: Is interest the rate of interest that a borrower must pay after material breach of a loan covenant?

A: Yes.

Q: Is interest calculated only on the principal amount?

A: Yes, or on that portion of the principal amount that remains.

Q: Is interest to be compounded in a year?

A: Yes.

Q: Is interest calculated as /P where P is the price paid?

A: Yes.

Q: Is interest composed of the real interest rate plus inflation?

A: Yes, and among other factors.

Q: Is interest prorated by the number of days t: ·100?

A: Yes.

Q: Is interest due?

A: Yes.