Defining Interest Rates

An interest rate is the price of borrowing money or the reward for lending money. There is an interest rate, either explicit or implicit, for every type of credit (or debt instrument), including bank accounts, certificates of deposit, U.S. Treasury securities, corporate bonds and mortgages, just to name a few examples. The website of any bank will list the interest rates it pays for every type of account it offers, as well as the interest rates it charges on every type of loan it makes. Similarly, the Wall Street Journal lists current interest rates for Treasury securities, corporate bonds and other debt instruments.

Self Check: Interests Rates

Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times.

You’ll have more success on the Self Check if you’ve completed the Reading in this section.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.