Tagged Questions

a generic tag for question on rate of interest applicable. Ideally should be accompanied by geography tag and other specific subject tags

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0
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1answer
52 views

APR for a Loan Paid Off Monthly

A loan is issued for 12 months for 1000 and is paid back with monthly payments of $140 each month. Does this loan have an APR of 68%?
0
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2answers
100 views

What are ways to increase my income after taxes?

I live in MA, USA. I recently got a job and feel like almost half of what I earn is going to taxes, and putting money in bank doesn't give enough interest. So what options do I have (like invest in ...
0
votes
1answer
30 views

Lending Club - Interest rate and interest received compared with total payments discrepancy?

I have a Loaner's Lending Club account. There seems to be a discrepancy between some of the numbers on my account (the discrepancy would be in my favor, I just want to know why they are the way they ...
0
votes
2answers
88 views

What happens to bonds values when interest rates rise? [duplicate]

I want to invest 10% of my portfolio into bonds. The other 90% will go into stock. I took a look at Government Bonds which TD Ameritrade offers at a $5000.00 minimum. This is a little over my ...
1
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2answers
47 views

Please help me understand reasons for differences in Government Bond Yields

First off, I'm completely new to all of this, so please go easy on me. According to http://markets.ft.com/research/Markets/Bonds I notice that the yields on the following government bonds are as ...
1
vote
1answer
111 views

What would current US interest rates be if left to the free market? [closed]

Suppose that the Federal Reserve did not conduct any open market operations and allowed interest rates to freely float, while the treasury continued borrowing to fund the budget deficit. What would ...
-2
votes
0answers
78 views

Mortgage interest rate question?

An adjustable rate mortgage with a teaser start rate of 1.5%, an index of six month LIBOR, a margin of 2.0%, and periodic and lifetime caps of 2/6 with semi-annual adjustments, would have a maximum ...
-2
votes
1answer
64 views

How much will I be saving off of interests if I fully pay my mortgage earlier?

I purchased a vacant lot and opted to pay for it in installment for 60 months at an annual fixed rate. This formula was used to calculate my monthly fee: M = P[i(1+i)^n / ((1+i)^n-1)] I am currently ...
1
vote
1answer
44 views

Loan with Compensating Balance

Trying to calculate effective interest rate on loan with the following terms: 128 day term loan 5.4% interest rate 12% compensating balance required Stuck by idea of compensating balance and how ...
-1
votes
1answer
216 views

Urgent advice on used car purchase nightmare

I purchased a used vehicle almost 2 years ago and it was breaking down so i decided to turn it in. I was pre-approved through my credit union for $20,000 at 100%. My current loan is upside down by ...
2
votes
3answers
99 views

Buying Fixed Deposit in India from Europe

Given the chance, does it pay off to open a FD in India (high interest rates, high inflation) with Euros (low interest rates, low inflation) from Europe? Or is it too risky on the long run (~ 1 ...
1
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2answers
152 views

What does an interest rate “calculated daily and paid monthly” on my bank account exactly mean?

I have a CIBC premium growth account that offers a "0.20% interest rate on every dollar you save calculated daily and paid monthly". I'm just curious as to what the 20% Premium Growth interest rate ...
-2
votes
1answer
32 views

calculate return on investment [closed]

I am interested in calculating returns from a fixed no of periodic investments that is redeemed at a specific time after the last payment. ex : periodic outflow of 3000 on a monthly basis for 8 ...
1
vote
2answers
430 views

Too low interest rate in New Zealand

I came from a country with high interest rates where you can easily find an investment that pays more than inflation, but I moved to New Zealand and was surprised when I saw that the inflation rate is ...
7
votes
4answers
848 views

Should I get cash from credit card at 0% for 8 months and put it on loans?

I have approx $100K in student loans, and am still in my grace period. I am able to get approx $4K cash from my citibank card as a special promotion. I would not have interest on the card until April ...
0
votes
0answers
31 views

Adjustable rate loans based on LIBOR spreads

I'm trying to create an operating model for a company based on a macabacus.com template. I'm working on the debt schedule and need help understanding LIBOR rates. If you scroll to line 248 in the ...
0
votes
3answers
163 views

Is 6% too high to trade stocks on margin?

Lets assume I understand the risk of trading on margin and that I can lose the money. My question is if 6% is too high? I do have dividend paying stocks that could almost cover the monthly interest ...
2
votes
2answers
95 views

Systematic investment plan interest calculation

How can I calculate the effective compound annual growth rate (http://en.wikipedia.org/wiki/Compound_annual_growth_rate) for a systematic investment plan ...
0
votes
1answer
83 views

Where to buy good corporate/goverment/treasury bonds?

I am non american citizen. I read a portion of Benjamin Grahams, "The Intelligent Investor" he suggests that one should always have a portion of ones savings in bonds. Specifically, he mentions SERIES ...
0
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2answers
198 views

Why is a home loan (mortgage) cheaper than gold loan?

I am not sure if this is a India specific issue. I understand that gold is a basically non-value add asset and real estate business generates jobs and people do need houses to live in. My doubt is ...
-1
votes
1answer
66 views

Calculate Finance Rate, Interest Amount when we have below line Fees

Since i am not from Finance and Software Developer i find it difficult to create formulaes I have these inputs: Principal Sum: Interest Rate: Below Line Fee: Number of Payments: True Rate or ...
5
votes
1answer
111 views

Why does it matter if a Central Bank has a negative rather than 0% interest rate? [closed]

I saw in the news today that the European Central Bank lowered its interest rate below zero. My understanding is that this rate is what banks are paid (or if negative, "charged") by the central bank ...
1
vote
1answer
71 views

Buying a House and Taking Part of 20% to move initial payment date forward

From what I have come to understand 20% is the amount you ideally pay down on a house primarily because personal mortgage insurance isn't required. One risk I would like to hedge if I buy a house is ...
2
votes
1answer
181 views

Taking out a private loan to pay off student loans

My wife and I have a large sum of student loans (>150k together). She is now out of school and I'm in the latter years of a PhD program. So we both have steady incomes. My loans are from the ...
2
votes
4answers
359 views

Relation between inflation rates and interest rates

In Canada, as of the time of writing this question, the: Key interest rate is 1.00% (source) The inflation rate is 1.50% (source) In India, at the time of writing, the: Base interest rate is ...
8
votes
2answers
376 views

Mongolian bank offering a high interest rate. What's the catch?

A bank called Khan Bank in Mongolia is offering to keep my savings at 15.10% interest rate, account denominated in Mongolian Tughriks. They give an example "if you saved 100.000 MNT on 2013/11/12 you ...
1
vote
2answers
130 views

Do bond interest rate risk premiums only compensate for the amount investors might lose?

Consider two different bonds: one riskless, and the other risky. Suppose the risky bond has a known probability of default. Suppose a market is made in these bonds, with investors trying to maximize ...
4
votes
3answers
113 views

What's the difference between buying bonds and buying bond funds for the long-term?

I know that if I buy a bond and hold to maturity, I will get the value plus the coupon. If rates go up, the resale value of my bond will go down, and vice versa. However, what happens if I buy into ...
1
vote
2answers
79 views

interest rate on online banks

i live in Israel, a country with a non-competitive banking system, which causes them to offer unattractive interest rate on almost every acoount (regular, savings short term deposits etc.-- short term ...
1
vote
1answer
64 views

Reasonable alternatives to using the Treasury rate as the risk free rate, e.g. for CAPM calculation?

For all practical purposes, the risk free interest rate is taken to be the short term Treasury bill interest rate. Let's say this rate is 0.5% per annum. But for an individual investor, if his bank ...
6
votes
3answers
674 views

What is the “rule of 70” or “rule of 72” with regards to investment, and how do I apply it?

What is the "rule of 72" (sometimes called the "rule of 70") with regards to investment, and how do I apply it?
2
votes
2answers
110 views

How to calculate whether it's better to pay my education loan, or my home investment loan?

I have an education loan @ 11.5 % for 1,000,000. I can pay it in 3 years. I am planning to make an investment by buying a home @ 10.5% for 2,200,000. Term = 20 yrs. I am thinking if I sell the house ...
1
vote
2answers
114 views

Suppose earning an APR of 7% for 5 years, with interest compounded quarterly. What is the EAR? What is the Total Return?

Suppose you earn an APR of 7% for 5 years, with interest compounded quarterly. What is your EAR? What is your Total Return? The part I am confused is "with interest compounded quarterly" The ...
1
vote
1answer
130 views

Help with Loan Amortization Question

Hello I'm stuck on a question if anyone could walk me through on the steps that would be great. This is a loan Amortization question The principal amount is $100,000 The Interest Rate is 3% The ...
1
vote
3answers
897 views

Issuing bonds at discount - computing effective interest rate

Suppose Southwest Airlines issued $100,000 of 9%, 5-year bonds when the market interest rate is 10%. The market price of the bonds drops, and Southwest receives $96,149. First of all, in my textbook ...
4
votes
2answers
185 views

Which student loans to pay off first: Stafford or private?

I'm really trying to buckle down and get ride of my student debt. I currently have Stafford and Private loans (I owe more on my private loans). I'm wondering which are best to pay more towards? ...
2
votes
4answers
144 views

What evidence is there that rising interest rates causes Canadian condo prices to go down?

I live in Toronto Canada where condos are extremely expensive. I'm willing to wait 2-3 years to build up down payment to buy a condo. I'm hoping within the 2-3 years, interest rates will go up by 1-2% ...
0
votes
1answer
225 views

LIBOR and prime rate fluctuation

Why does the LIBOR fluctuate but the prime rate does not fluctuate (as often)? Is it because LIBOR is not regulated by any particular bank but it is based on a mutual agreement between the banks; ...
4
votes
3answers
136 views

How can I calculate yearly interest of my investment gain?

I'm trying to figure out the yearly interest of a potential investment. Lets say I invested $10 000, 13 days later i cash out and I now have $10 500. The interest here is 4,76% for 13 days. But can I ...
3
votes
1answer
143 views

Why government bonds fluctuate so much, even though interest rates don't change that often?

Why do government bond prices fluctuate on a daily basis on the bond market? I can understand the fluctuation of corporate bonds because they are tied to the credit worthiness of the company and ...
0
votes
2answers
55 views

Relation between interest rates and currency for a nation

I understand that if interest rates of a country A is higher than that of B, then that draws foreign investment from B to A thus strengthening the currency of A. In other words, a high interest rate ...
0
votes
2answers
96 views

How to get 0% financing for a car, with no credit score?

Is it possible to get a 0% interest rate for car loan for a used car in the U.S.? I've been working for 7 months and I just got my first credit card, so I don't have a credit score yet. I'm planning ...
3
votes
1answer
410 views

How rate of interest scheme in bank works?

When I was looking at SBI site, I got this info: Loan Amount Rate of Interest* For loans upto Rs.4 lacs - 3.50% above Base Rate, currently 13.50% p.a. What does it mean? interest rate is ...
0
votes
1answer
116 views

How can a bank offer a higher interest rate for a savings account than for a GIC?

At this link on rates offered by ICICI, the TFSA savings account rate currently being offered is 1.8% but the GIC rate being offered is 1.75%. But why would anyone put money in a GIC and lock it up ...
-1
votes
1answer
131 views

Difference between bank rate and prime rate

What is the difference between the bank rate and the prime rate? The prime rate is the rate at which banks lend each other money, but what is the bank rate?
-1
votes
1answer
274 views

How often does the prime interest rate change

How often does the prime interest rate change? Will it only change when the new budget comes out or can it change anytime? I am interested to know this because all other interest rates (i.e mortgage ...
1
vote
1answer
51 views

Fair Value of a monthly payment given two Bank Payment structures

The question below was given in class and I have doubts about the use of the word "fair value". THe provided solution is to have Bank B make an overall return on the mortgage of 12%, but I don't agree ...
0
votes
1answer
81 views

Appropriate model for deferred costs as a line-of-credit

I have a business situation where one party will agree to defer some costs until a future date, perhaps two years, but no fixed time. This principal will increase linearly over the course of 6 months ...
1
vote
4answers
276 views

Are 'no interest if paid in in x months' credit cards worth it?

So my current laptop is dying the slow death, specifically the charging circuit in the motherboard is failing; the battery charges in another laptop of the same model. I've considered just running it ...
6
votes
1answer
141 views

Is the mortgage interest calculated on original principal or remaining principal

When I take a mortgage of 300 000 at 3% annual rate, will the 3% always be calculated on the 300,000? Or will it be calculated on the remaining principal? i.e if after a year, I paid off 15,000, the ...