1.A lender charges a borrower an interest rate that is a percentage of the principal (the amount borrowed). The interest rate on a loan is referred to as the annual percentage rate (APR) (APR). Money acquired through a savings account or a certificate of deposit at a bank or credit union can also yield interest (CD). The annual percentage yield is the amount of money earned on these deposit accounts (APY). 2.The required rate of return (RRR) is the lowest rate of return an investor will accept in exchange for taking on a specific amount of risk by owning a company's stock. The RRR is used in corporate finance to evaluate the profitability of new investment projects. 3.Demand for and supply of money, government borrowing, inflation, Central Bank’s monetary policy objectives affect the interest rates.