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Thought-Process to Discover Knowledge

Welcome to nubtrek.

Books and other education websites provide "matter-of-fact" knowledge. Instead, nubtrek provides a thought-process to discover knowledge.

In each of the topic, the outline of the thought-process, for that topic, is provided for learners and educators.

Read in the blogs more about the unique learning experience at nubtrek.
mathsCommercial ArithmeticsSimple & Compound Interest

### Story of "Interest"

In this page, the following terminology is introduced
loan,
investment,
deposit,
lender,
borrower,
principal,
interest,
interest rate,
loan duration, and
loan maturity value.

The story connecting these are made very easy to remember.

click on the content to continue..

Consider: One customer buys a pen for 20 coins from a shopkeeper. Does the shopkeeper manufacture the pen herself?

• most shopkeepers do not manufacture by themselves, but buy from manufacturers
• most shopkeepers do not manufacture by themselves, but buy from manufacturers
• all shopkeepers manufacture goods by themselves

The answer is "most shopkeepers do not manufacture by themselves, but buy from manufacturers"

A shopkeeper buys a pen from manufacturer and sells it to customer. What does he get in doing this work?

• shopkeeper does not get anything
• shopkeeper buys for a low value and sells for a higher value, and makes a profit
• shopkeeper buys for a low value and sells for a higher value, and makes a profit

The answer is "shopkeeper buys for a low value and sells for a higher value, and makes a profit". For example, shopkeeper bought a pen for 12 coins and sells for 20 coins. The 8 coins is the profit for his work.

A shopkeeper has some thousands of items for sale. Each of these items are bought from manufacturers. Which of the following is true in this?

• shopkeeper should have put in the money to buy the goods
• shopkeeper should have put in the money to buy the goods
• shopkeeper need not have money to buy the goods

The answer is "shopkeeper should have put in the money to buy the goods".

Money can be invested and it will provide profit. The shopkeepers put their own money and make a profit.

For example: A shopkeeper has put in 1,00,000 coins in buying goods and makes 20,000 coins per month in profits.

This is true for other professions as well, not just for shops. Like hotels, sports venues, mobile phones, furniture, etc.

A person does a job or business that occupies her entire time. She has excess of 3,00,000 coins.

A shopkeeper has only 20000 coins and require additional 1,00,000 coins to run the business.

Which of the following is possible between these two persons?

• the working person can give her excess money to the shopkeeper
• the working person can give her excess money to the shopkeeper
• there is no arrangement possible between these two persons

The answer is "the working person can give her excess money to the shopkeeper".

A person agrees to give 1,00,000 coins to the shopkeeper. The shopkeeper uses the money to develop the business and starts to earn profit of 30,000 coins per month. Which of the following is correct?

• shopkeeper can keep the profits to himself
• shopkeeper should share the profits with the person who gave money
• shopkeeper should share the profits with the person who gave money

The answer is "shopkeeper should share the profits with the person who gave money".

A formal arrangement of this is a loan given to a business person or deposit made in a bank.

Which of the following is a meaning for the word "loan"?

• something borrowed that should be paid back
• something borrowed that should be paid back
• a loud noise

The answer is "something borrowed that should be paid back". When a person takes a money from another person or a bank, he or she has taken loan.

What is the term used to refer "money borrowed that should be paid back"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "loan".

Which of the following is a meaning for the word "investment"?

• money given to someone or a bank to earn more
• money given to someone or a bank to earn more
• a soft inner-wear

The answer is "money given to someone or a bank to earn more".

What is the term used to refer "money given to someone or a bank to earn more"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "investment".

Which of the following is a meaning for the word "deposit"?

• a locker in a railway-station
• money given for safe-keeping (usually in a bank) and that, in turn, earns more money
• money given for safe-keeping (usually in a bank) and that, in turn, earns more money

The answer is "money given for safe-keeping and that, in turn, earns more money".

What is the term used to refer "money given for safe-keeping and that, in turn, earns more"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "deposit".

Which of the following is a meaning for the word "lender"?

• the person who gives a loan
• the person who gives a loan
• a person who has a large land

The answer is "the person who gives a loan". A lender can be a bank too.

What is the term used to refer "the person who gives a loan"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "lender".

Which of the following is a meaning for the word "borrower"?

• a person who digs a burrow
• the person who takes a loan
• the person who takes a loan

The answer is "the person who takes a loan".

What is the term used to refer "the person who takes a loan"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "borrower".

Which of the following is a meaning for the word "principal"?

• the money initially given on which earnings are calculated
• the money initially given on which earnings are calculated
• prime suspect in a criminal case

The answer is "the money initially given on which earnings are calculated".

What is the term used to refer "the money initially given on which earnings are calculated"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "principal".

Which of the following is a meaning for the word "interest"?

• the earnings paid on the principal
• the earnings paid on the principal
• resting inside a tent

The answer is "the earnings paid on the principal".

What is the term used to refer "the earnings paid on the principal"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "interest".

Which of the following is a meaning for the word "interest rate"?

• the interest amount calculated per unit time is the interest rate
• the interest amount calculated per unit time is the interest rate
• the increase in interest over time

The answer is "the interest amount calculated per unit time is the interest rate".

What is the term used to refer "the interest amount calculated per unit time"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "interest rate". Interest rate is given as a percentage per a defined time period.

Which of the following is a meaning for the phrases

"loan duration"

"deposit time period"?

• the time period or duration for which loan or deposit is effective
• the time period or duration for which loan or deposit is effective
• how long it takes to get a loan

The answer is "the time period or duration for which loan or deposit is effective".

Which of the following is a meaning for the phrase "maturity value"?

• the total value of money at the end of the loan or deposit duration
• the total value of money at the end of the loan or deposit duration
• money that is used in business

The answer is "the total value of money at the end of the loan or deposit duration".

What is the term used to refer "the total value of money at the end of the loan or deposit duration"?

• Pronunciation : Say the answer once
Spelling: Write the answer once

The answer is "maturity value".

loan : Money borrowed, which should be paid back at a later time.

investment : Money given, which should earn more money.

deposit : Money given for safe-keeping, which in turn, earns more money.

lender : A person or company giving a loan.
investor and depositor for investment and deposit respectively

borrower : A person or company receiving a loan.

principal : The amount of money given in a loan.
capital and deposit amount for investment and deposit respectively

interest : The amount of money returned in addition to the principal.

interest rate : The amount of interest per unit time per 100 of the principal.

loan time period:
loan duration:
deposit time period:
deposit duration
:
The time duration for which loan or deposit is effective, and at the end of which, the principal and any interest is returned.

maturity value : The principal and interest received at the end of loan or deposit duration.

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