An interest rate is a standardized measure of either: (1) the cost of borrowing money or (2) the return for lending money for a specified period of time (usually one year), such as 12% annual percentage rate (APR).

First consider the term "interest" from the perspective of a borrower. In this case, "interest" is the difference between the amount of money borrowed and the amount of money repaid. Interest expense is incurred as a result of borrowing money. On the other hand, interest revenue is earned by lending money.

For example, the amount of interest expense, as a result of borrowing $1000 on January 1, 20XX, and repaying $1120 on December 31, 20XX is $120 ($1120 $1000). The lender, on the other hand, received $1120 on December 31, 20XX in exchange for lending $1000 on January 1, 20XX, or a total of $120 in interest revenue. Thus, with regard to any particular lending event, interest revenue equals interest expense...