The Basics of Interest Rates

The cost of money is the opportunity cost of holding money instead of investing it, depending on the rate of interest.

An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender.

Market interest rates are mostly driven by inflationary expectations, alternative investments, risk of investment, and liquidity preference.

Term structure of interest rates describes how rates change over time.