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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5
votes
3answers
750 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
20 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
139 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
44 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
54 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
votes
2answers
161 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
42 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
94 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
70 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
142 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
223 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
255 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
1answer
82 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
98 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
72 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
56 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 ...
5
votes
3answers
551 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
103 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
94 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
91 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
289 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
141 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
129 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
151 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
115 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
115 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
47 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
82 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
263 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
101 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
87 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
166 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
74 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
268 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
128 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 ...
4
votes
2answers
217 views

Should I attempt to consolidate my own debt, or hire a professional? (Are there caveats to consolidating your own debt?)

I have some credit card debt across 3 accounts. Currently they're all at 0 APR, but the promotional rates are set to end soon, and I don't want to open any more accounts. In this situation, I'm aware ...
2
votes
1answer
104 views

What questions should I ask a mortgage broker when refinancing a condo in Wisconsin?

I live in Wisconsin. I'm trying to refinance my condo right now. I have next to no experience with refinancing, but I'd like to do some research on the subject before I start asking these questions, ...
9
votes
5answers
471 views

What is the best way to stay risk neutral when buying a house with a mortgage?

I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to ...
1
vote
1answer
436 views

Where can I find historical data on home equity loan rates?

I have found a graph of historical home equity loan rates on bankrate.com, but I am looking for the underlying data, so I can do a 3-year average. I found the equivalent for mortgage rates on Freddie ...
2
votes
1answer
165 views

If I lose 20%, what rate of return do I need to break even?

If the account is down 20%, what rate of return over the next year do we need to get to be even, in other words make back the 20% we lost? The rate of inflation in this case is zero.
3
votes
3answers
440 views

Negative properties of continuously compounded returns

I'm taking an intro to quant finance course online. I'm trying to better understand the properties and uses of continuously compounded returns. Specifically for this question, how can you have ...
1
vote
1answer
72 views

How do markets “factor in” a future event?

I was reading an article in the The Economist about interest rates being set by the Bank of England. Regarding a potential future rise in interest rates set by the bank, the article said: Markets ...
0
votes
1answer
496 views

How much higher should my APR be than my rate?

First time home buyer looking at mortgages and having a hard time understanding the difference between good and bad on rates. On a loan estimate I have been quoted 4.75% rate(seems high?) and 5.795% ...
7
votes
5answers
801 views

Why would a car company lend me money at a very low interest rate?

Why would a car company lend me money at 1-2% when they could lend it to the federal government at ~2.9% with zero risk?
2
votes
2answers
1k views

Is the price of a long-term STRIP typically higher than that of a short-term STRIP?

When interest rates and duration are taken into account, how do they affect the prices of STRIPS ? I'm so confused with this question.
4
votes
2answers
426 views

Why do interest rates increase or decrease?

Do interest rates increase based on what the market is doing, or do they solely increase based on what the Federal Reserve sets them at? Why is it assumed that interest rates are going to increase ...
6
votes
5answers
4k views

Why do 10 year Treasury bond yields affect mortgage interest rates?

Why is it that when the yield on a Treasury bond increases (because people are selling their bonds, I believe), mortgage rates increase as well? Is there any sort of inherent connection between them? ...
-2
votes
1answer
74 views

Why does low interest rate prevent bankruptcy and foreclosure?

In recent news, there is a saying like low interest rate prevented bankruptcy and foreclosure. I can't get it. This seems only to apply for variable interest rate loans... How is low interest rate ...
2
votes
1answer
178 views

Can I go from a stated annual rate compounded annually to a semestral effective interest rate?

If the compounding period is one year, so in 6 months you haven't earned any interests yet, therefore you wouldn't be able to use the formula for the equivalent rate, one should use the formula for ...