Interest is the income earned from lending savings, capital is impacted by interest and profit, and dividends are payments from company profits.
Interest is the income earned from lending savings to others, usually quoted as a percentage of the principal. For example, receiving [tex]$50 on a $[/tex]1,000 loan is a 5% interest rate.
Capital is directly impacted by interest and profit. Interest is the fee paid by a borrower for using assets, while profit is the accumulation of capital driving economic activity.
Dividends are payments to shareholders from a company's profits, not based on the amount of money the bank holds.
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