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Principles of Economics
Found in: Page 425

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Short Answer

If you receive $500 in simple interest on a loan that you made for $10,000 for five years, what was the interest rate you charged?

Interest rate is obtained as 1%

See the step by step solution

Step by Step Solution

Step 1: Concept introduction

The Random Walk Theory: The random walk theory asserts that past fluctuations or patterns in stock market prices cannot be used to foretell or predict future stock market prices of movement. Alternatively, it might relate to the future unpredictability of stock market pricing.

Step 2: Calculation 

The interest rate charged is 1 percent.

Simple Interest = Principal Rate Time

Interest amount = $ 500

Time period = 5 year

Principal amount = $10,000

Interest Rate = ?

Interest rate =

Interest rate =

Interest rate = 1%

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