5 ms·
No, interest usually compounds. This is more like a one-off currency trade of now-dollars versus future-dollars.
by icky 18y ago
No, interest usually compounds. This is more like a one-off currency trade of now-dollars versus future-dollars.
- aneesh 18y agoStill, you are giving some amount of today's dollars in return for a larger amount of tomorrow's dollars. That implies some effective interest rate over that time period. Also, while most financial institutions use compound interest, the concept of simple interest also exists. Am I missing something?
- dangoldin 18y agoThis thread reminds me of Islamic laws dealing with interest. Since you can't charge interest, the solution is to go into a trade like transaction. http://en.wikipedia.org/wiki/Islamic_banking#Modern_Islamic_banking http://en.wikipedia.org/wiki/Islamic_banking#Modern_Islamic_... So even if charging interest is forbidden in one way, there are ways to circumvent that.