If not, an alternative version of this page that should work with most browsers is available here. Today, nobody heeds the advice of Polonius to his student son Laertes. Everybody borrows and lends all the time. Children put their pocket money into a bank account to save up to buy a bicycle.
Students take out loans to finance their studies.
Credit cards are widely used for short-term borrowing. Young couples buy houses on mortgages of 20 to 30 years, and save for their retirement. Understanding lending and borrowing means understanding compound interest. For a career in the world of finance, that understanding has to be broad and thorough. In this article we will not attempt a comprehensive coverage of all the intricate details of the subject, but will try to show that compound interest is an essential component of numeracy, involves some interesting maths, throws up some surprising, even paradoxical results from time to time.