Money, Banking, and Financial Markets Practice Test: The Basics of Interest Rates — Flashcards

Market interest rates are the rates at which borrowers pay lenders for the use of their money. They are the price of borrowing in the financial market and are expressed as a percentage rate over a period of time. Interest rates are determined by the interaction of the supply and demand for funds in the money market. 

Economists generally agree that the interest rates yielded by any investment take into account: The risk-free cost of capital and Inflational expectations. 
There are seven standard types of interest rates that you'll see among various financial products: Simple interest, Compound interest, Effective interest, Fixed interest, Variable interest, Real interest, and Accrued interest. 
Interest rates may be fixed, meaning the rate is set and will not change, or may be variable or "floating," meaning the rate may move higher or lower over time.