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How do you define the term "interest rates"?
in Economics and Finance by Gold Status (10,261 points) | 10 views

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Interest rates can be thought of in three ways.

First, they can be considered required rates of return - that is, the minimum rate of return an investor must receive in order to accept the investment.

Second, interest rates can be considered discount rates. In the example above, 5.26 percent is that rate at which we discounted the \$10,000 future amount to find its value today. Thus, we use the terms "interest rate" and "discount rate" almost interchangeably.

Third, interest rates can be considered opportunity costs.

by Gold Status (10,261 points)

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