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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1answer
57 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
36 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
188 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
84 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 ...
0
votes
2answers
125 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
29 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
421 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
838 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
29 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
158 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
85 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
71 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
183 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
57 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
108 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
170 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
344 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
337 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
119 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
110 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
77 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
58 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
643 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
109 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
111 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
121 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
693 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
180 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
140 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
213 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
130 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
130 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
95 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
375 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
112 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
118 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
249 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
79 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
274 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
137 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
229 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
109 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
511 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
640 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
195 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
527 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
73 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 ...