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If you take out a Mortgage and decided not to make payments, It is the interest that they should have collected during the time it took for them to foreclose and dispose of the property. It is truly a cost to the bank. Say the bank pays somebody 5% on a Certificate of deposit. They turn around and loan the money to you at 6%. When you don't pay they still have to pay the interest on the CD.

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Q: What is foregone interest?
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Continue Learning about Math & Arithmetic

Would the statement 'Simple Interest is interest earned on interest' be True or False?

False. Interest upon interest is compounded interest


What is a simple interest in math?

Simple interest is interest that is calculated only on the amount of unpaid principal on a loan. Such interest is not added to the value of the loan but is tracked separately. Compound interest is interest that is calculated on the total of unpaid principal and accumulated interest on a loan. The difference is in simple interest there is no interest charged on accumulated interest while in compound interest there is interest charged on accumulated interest.


Interest earned on interest is known as?

Compound Interest


What are the major differences between compound interest loan and simple interest loan?

With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.With compound interest, the interest due for any period attracts interest for all subsequent periods. As a result, compound interest, for the same rate, is greater.


What are some of the uses of compound interest in business?

compound interest increases interest more than simple interest