Question

Interest is always expressed in terms of ............... per annum.

Hint:

Remember: Always check the annual rate — it decides how much you pay or earn every year.

Answer 1

In banking and finance, interest refers to the cost of borrowing money or the return earned on deposits or investments.
It is always stated in terms of a rate — that is, a percentage of the principal amount.
The standard practice is to express this rate annually, which is why we often see terms like ‘annual interest rate’ or ‘per annum’.
For example, if you deposit money in a savings account with an annual interest rate of 5%, it means you earn 5% of the principal every year.
Similarly, when taking a loan, the borrower pays interest annually at the specified rate.
Stating the interest rate per annum makes it easy to compare different financial products and understand the cost or return over a full year.
Therefore, the correct answer is: interest is expressed in terms of Rate of Interest per annum.