Questions tagged [interest-rate]
a generic tag for question on rate of interest applicable. Ideally should be accompanied by geography tag and other specific subject tags
4
votes
2answers
309 views
Saving rate higher than the Fed rate: Too good to be true?
Recently I saw this Intrx company advertise a savings account with 2.91% APY on Facebook, and claim it would be FDIC insured up to 100M.
They explain their business in the following:
We are an ...
1
vote
3answers
78 views
Can I make financial/investment decisions just by comparing percentages?
I see a lot of investment and personal finance resources that propose scenarios like the following: if you have a loan for a house with a 5% interest rate and additional income after the minimum ...
1
vote
1answer
43 views
Annuity vs Bond Returns
The way I understand it buying a simple term annuity from an insurance company is like depositing money in a account that earns fixed interest compounded for the duration of the annuity and taking out ...
0
votes
1answer
40 views
Interest rate risk of bond that is held to maturity
While reading online about interest rate risk associated with bonds it stated that if an investor plans to hold a bond until its maturity then interest rate risk is insignificant since the final ...
1
vote
1answer
35 views
Calculating Bond returns as an annual compounded rate
I've been reading up on bonds and the different methods there are of calculating the yield of the bond. So suppose I bought a $1000 face value with a 5% coupon that pays semi annually for $995 with a ...
2
votes
3answers
76 views
Bonds Yields and Coupon Rate
I read about bonds.
Let's say the face value is 1000 rupees and the coupon is 10%. The coupon will be 100 which will be issued at the end of the year if the maturity is one year. Is that correct?
...
0
votes
2answers
213 views
Are you out of pocket if moving before paying mortgage interest?
Please could somebody clarify the following scenario for me (first time buyer)? Are there any tips? Any differences if moving from one lender to another?
Supposing I take out a 25 year mortgage on a £...
0
votes
2answers
181 views
How are micro-finance banks able to offer interest rates so much higher than traditional banks?
Recently while browsing on google I came to know that there are few small-finance banks which offer great returns with the high amount of interest rate up to 7% and fixed deposits up to 9-9.5%. like ...
2
votes
1answer
41 views
Selling Interest Rate Swaps
Suppose two parties have entered into an interest rate swap. Would it be possible for one party to sell their portion of the contract to another party? Or would that party have to enter into an ...
2
votes
1answer
65 views
Understanding effective interest rate and compounding period
An article I'm reading says "An effective monthly rate [on a loan] is quoted over a one-month period. Since it is effective, it is compounded once per month." Is that still true if there's no ...
0
votes
1answer
37 views
How to compare the APRs of different currencies?
I want to take a loan and I have two options:
Euros APR: 7.2% terms: 10 years
Yuan APR: 9.2% terms: 5 years
I have taken some financial classes so I have a vague idea about it. I know there is an ...
1
vote
0answers
40 views
Arbitrage on Libor rate and Swap rate
I must be wrong here, but still want to know where I am wrong. I found the data of Libor rate and swap rate from this link:
http://www.interestrateswapstoday.com/libor-rates.html
At the time, I read
...
1
vote
1answer
54 views
Optimizing pay down of multiple loans
Most resources seem to indicate that you want to pay down loans in order of decreasing interest rate. However, I did some manual calculations and found I should be paying down the loans based on the ...
2
votes
4answers
1k views
minimum repayment on home loan
How to calculate home loan minimum repayments (before taking out the loan).
For example, with a credit card, they clearly state, that you need to make X amount as minimum repayment (maybe 10%) with Y%...
2
votes
0answers
44 views
Is a bank account or branch manager able to give higher interest rates on CDs to preferred clients? [duplicate]
Can an account manager or branch manager of your bank give you higher interest rates on savings or CDs (Certificates of Deposit) if you are a preferred client? For instance, if a long time client who ...
-1
votes
1answer
43 views
Present value of a sequence of payments doubt
Assuming the nominal interest rate is greater than 0, rank the following three sequences of payments according to their present value:
Sequence "A": $90, $100, $110
Sequence "B": $100, $100, $100
...
0
votes
1answer
41 views
How to get my head around FRAs
I'm completely befuddled by FRAs - forward rate agreements. Take a look at this definition
....But, how EXACTLY does that fix an interest rate for me at all? There's nothing in that definition that ...
19
votes
5answers
8k views
Is it possible to lock in a high interest rate in savings, when general interest rates are high?
I've heard anecdotes about high-interest savings accounts (4.5% around 2006, even 8% in the 80s), that were opened when interest rates (federal funds rate) were high. The implication seemed to be ...
1
vote
1answer
42 views
Effect of FED/ECB interest rate on EUR/USD exchange ratio
In 2016, the ECB has lowered interest rate to 0%.
Some people assume that within the next few years, the ECB will increase the interest rate.
How would that most probably affect the EUR/USD exchange ...
5
votes
2answers
147 views
Why would anyone go for the shortest term no-penalty CD with lower rate?
Consider below's no-penalty CDs offered by the same bank with the same rules. Why would anyone go for the shortest CD (7 months) if one can get a better rate getting the 13 month CD and close early ...
0
votes
1answer
55 views
Extension risk with IO bonds
I'm trying to understand the extension risk associated with interest only bonds in a CMO. When rates rise, prepayments drop, and so the life of the IO bonds is extended. This causes the value of the ...
0
votes
1answer
124 views
Bond sell off vs stocks
U.S. stocks fell following a bond selloff that sent yields to multi-year highs. New filings for unemployment fell unexpectedly to near 49-year lows.
The benchmark 10-year U.S. Treasury yield rose ...
1
vote
4answers
313 views
European banks, low interest rates and “free money” for home owners?
Where I live in Scandinavia and across Europe, interest rates are very low.
More and more people are using the rising value of their home to draw out money. I would almost call it "free" money when ...
3
votes
2answers
82 views
Can you use fed interest rates to predict the share price of a bond ETF?
The Fed interest rate is inversely proportional to a bond's value:
When the Fed increases interest rates, your bonds lose value.
When the Fed decreases interest rates, your bonds gain value.
Since ...
5
votes
4answers
168 views
Is it best to pay back only the minimal compulsory payments for HECS-HELP student loans in Australia?
I have a considerable amount in student loans by Australian standards. I have multiple degrees and they allowed me to get a job that pays well. With such a job, the Australian government requires me ...
2
votes
5answers
376 views
Why is “low interest rate” an argument for buying property?
I live in California since 2000 and the prices of houses have forever made me felt like it's just beyond my reach to wildly ridiculous. But everybody and their dog has always been adamant that buying ...
0
votes
1answer
27 views
Optimal interest rate environment for mortgage-backed securities?
When rates rise MBS investors face extension risk and when rates are dropping investors face prepayment risk. If this is true then when is the optimal time to invest in MBS?
2
votes
2answers
111 views
Question about the Federal Funds Rate
As I understand it, the Fed will set a target for what it wants the Federal Funds Rate to be and then try to achieve this goal through its open market operations. Is the amount of volume that the Fed ...
0
votes
1answer
104 views
Minimum interest needed to keep money at same value with 4% inflation?
For 30 years, my calculation says 7.17%, which just doesn't seem right.
Say you invest $1 each year for 30 years with a return of investment of 7.17%
Total investment from your end = $ 3
Total ...
3
votes
6answers
425 views
Why is it so hard to get a quality loan as an individual?
Currently federal funds rate is 2%, this is about what it should cost for a bank to borrow money from the government. I doubt lending money costs them much more than this. Loans taken by corporations ...
-1
votes
1answer
190 views
Gold price in my country. Is it a good investment during hyperinflation? [closed]
On Wednesday, expectations of interest rate hikes in the United States limited profits and put pressure on gold.
US gold futures for delivery in December 2018 fell to $ 1,211.50 per ounce, pressured ...
0
votes
1answer
105 views
Credit Card Interest Rates
From what I can see, the going fixed interest rate in the US and Canada with Visa, and MasterCard is about 20%. I almost never see a card with a lower interest rate than this. If I do see one it is a ...
1
vote
2answers
299 views
How do I convert a 4% per annum interest rate, compounded semi-annually, to a monthly rate?
Trying to develop a budget model in Excel. I know a prospective savings account makes 4% per annum, compounded semiannual. I'd like to know how much this means it earns monthly. Does it even earn ...
6
votes
2answers
3k views
If Checking Account's and Saving Account's interest rates are the same, what is the point of having a Savings Account? [duplicate]
In this question I am using Wells Fargo as an example.
https://www.wellsfargo.com/savings-cds/consumer-account-rates/
You will see that the interest rate for a checking account is the same as for a ...
1
vote
3answers
361 views
Comparison of Mortgage Rate vs 10 Year Treasury Rate
One of the typical reasons mentioned to not pre-pay a mortgage is that the interest is tax deductible and therefore the effective rate on the mortgage is much lower. However, this argument doesn't ...
1
vote
1answer
112 views
Rate of return on a loan
If I lend you $100 at, say, 10% annual interest for a 3 year term (36 months), your monthly instalment (usual amortization schedule) should be $3 per month for 36 months, for a total of $116, right?
...
1
vote
1answer
90 views
Loan with floating interest [closed]
I have taken a 7 years loan of 450 000 for a car in January 2017 with monthly payment of 7077. The interest rate was 8.25% which means that the total repayment is 593878 after 7 years. As from ...
17
votes
4answers
8k views
Does “monthly interest of 1.5% AER” mean that I will get a 1.5% interest every month?
I'll soon be 16 and I'm comparing a few high interest savings / current accounts and this one from Santander UK looks too good to be true, so I think I'm not understanding it right.
Santander 1-2-3 ...
3
votes
1answer
124 views
Interest Rates and compounding periods
How can interest be compounded quarterly but with payments made on a monthly basis? Can you give me an example?
3
votes
1answer
95 views
What are exactly these “interest rates” you hear about in relation to the Fed?
I know what interest is and what an interest rate on a loan, deposit, or bond is. What I do not quite understand, and what gets under my skin, is this generic "interest rate" you read alongside the ...
2
votes
1answer
66 views
Discount rate vs interest rate
I am getting confused with how to find the future value in DCF analysis. When the discount rate (i.e risk, opportunity cost etc.) increases, why does the future value increase? Isn't it supposed to ...
3
votes
2answers
199 views
Why are bank rates based on the federal interest rate?
From what I have read, the Federal Reserve sets the "key rate", which is the rate at which banks can borrow money from the Reserve. However, I don't understand why both mortgage lending rates and ...
2
votes
2answers
178 views
Bond yields vs interest
At least from the US Treasury, why is there a yield AND interest rate when auctioning notes?
https://treasurydirect.gov/indiv/research/indepth/tnotes/res_tnote_rates.htm
I'm under the impression ...
0
votes
3answers
169 views
How to use credit card with balance on it?
I have a credit card that currently has balance on it past grace period. I am working on paying it out, but I also need it to pay for online purchases, etc.
I know that once you are past grace period,...
1
vote
2answers
137 views
Do any stocks benefit from a rise in interest rates?
I am planning to hedge against various financial risks by buying stocks that benefit from those financial risks.
For example, I use quite a lot of electricity. I have already purchased stocks of ...
3
votes
4answers
167 views
How common is it for banks to lower the high-yield introductory rate they use to entice people?
I was looking to put some money in a simple savings or money market account. But I found a caveat in each bank’s small print that made me hesitate.
The bank’s marketing shows a high rate, say 1.5% to ...
1
vote
2answers
557 views
Can a person negotiate with banks on CD interest rates?
I use a brick and mortar bank for some of my savings. I’d love to get a CD interest rate closer to what Ally or other online banks offer.
Are brick and mortar banks will to negotiate with customers ...
0
votes
1answer
63 views
How do interest calculations differ between loans and savings? [closed]
At the bank or financial institute how are the interest calculation is different from loans and savings? Are they calculated the same way?
1
vote
1answer
68 views
Question about credit card [duplicate]
My credit card due date is May 4th and the closing date is May 7th.
I have paid statement balance in full today, so it's early than the due date. But I would like to continue purchase through this ...
1
vote
1answer
233 views
How are CAGR and compounding frequency related?
I am newbie, so forgive me if my question seems trivial. I have a numerical where a bank scheme triples a person's investment in 5 years but it doesn't talk about the compounding frequency. Assuming ...
