Question

If you receive \(500 in simple interest on a loan that you made for \)10,000 for five years, what was the interest rate you charged?

Short answer

Interest rate is obtained as 1%

Step-by-step solution

Concept introduction

The Random Walk Theory: The random walk theory asserts that past fluctuations or patterns in stock market prices cannot be used to foretell or predict future stock market prices of movement. Alternatively, it might relate to the future unpredictability of stock market pricing.

Calculation 

The interest rate charged is 1 percent.

Simple Interest = Principal $\times$Rate $\times$Time

Interest amount = $ 500

Time period = 5 year

Principal amount = $10,000

Interest Rate = ?

Interest rate =$\frac{Simpleinterest}{Principle\times time}\times 100$

Interest rate =$\frac{\$500}{\$10000\times 5}\times 100$

Interest rate = 1%