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

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1answer
128 views

Why are EU banks hesitant to open an account and take our money?

In Europe, I work for a small/honest internet business. We make a fair profit every month, so we wanted to deposit our profits in different banks, until we decide what to do with the money. To our ...
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46 views

What drives long duration US Treasury Bond ETF prices?

I am looking at TLT, for example, a long duration (with average maturity around 25 years) bond ETF. I noticed that the fed funds rate (or the "interest rate" from federal reserve) has been ...
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3answers
214 views

Does it make sense to ladder CD's if the APY is the same for different periods?

I understand that CD ladders are a mechanism to take advantage of the various interest rates offered for different time periods. Given that, is there any point investing in longer and longer term CD's ...
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3answers
139 views

Why are bond interest rates set at the interest rate set by the Fed?

I have a question about bonds: why do corporations, municipalities, and the treasury set bond interest rates at the current U.S Federal Reserve interest rate? Also, how does the Fed set interest rates?...
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33 views

Have changes to mortgage standard variable rates ever diverged much from changes to base rate?

Historically, although SVRs tend to be a few percent above base rate, has any lender's SVR ever made a drastic change that wasn't caused by a change in base rate? This is in the context of risk of ...
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2answers
120 views

What determined the “cost of borrowing money” or the interest rate in a gold-based economy [closed]

In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold ...
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1answer
118 views

Difference between the Interest rate of bond and the interest rate of central bank

Does the increase or decrease of the Interest rate (coupon rate) of bonds have the same effect as rising or falling interest rate of the central bank on the economy? In other words when we say that ...
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2answers
45 views

How can I know the current interest rates for corporate bonds?

How can I check the interest rate of a bond issued by a particular company (e.g. GE)? I have found this for instance: GE corporate bonds. According to that, the coupon is ~8%. That sounds impossible ...
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1answer
50 views

Can I renegotiate desirable rates and terms on a paid-off credit card?

I would like to keep and use my business credit card, but I do not need it. I paid off around $10k today which took my balance to zero, now that my 0% introductory rate has ended. (The card is around ...
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21 views

How much benefit we earn with no cost emi on CC

I am thinking to take a policy on no cost emi of CC. I want to find money I saved annually by opting to no cost emi against paying all premium lumpsum at the start of the year. I want to consider ...
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2answers
78 views

Are the corporate bonds' interest rates set by central banks?

In countries which use a central bank system: When people speak about the 'interest rates', they mean interest to which the central bank (whatever it is) lends money to other banks, which in turn ...
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1answer
62 views

Interest rate difference - savings account in a foreign currency

I live in a EU country where I have a currency account in CHF with a local bank. The interest rate of this account is 0.01%, whereas the interest rate in Switzerland is currently at -0.75%. Doesn't ...
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1answer
96 views

Effective compounded interest rate with multiple interest rates

I'm looking for the effective annual compounded interest rate of an investment which requires me to save a fixed monthly amount, but the interest rate decreases as the investment gets closer to ...
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1answer
33 views

Solving for rate using the PVA formula

I'm trying to practice for the CFA exams next Dec. I've got a problem book and the solutions, but the solutions don't tell me specifically how to solve for rate using a financial calculator using the ...
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1answer
67 views

Why is LIBOR getting phased out? [closed]

It looks like LIBOR is set to be phased out at the end of 2021. Why is this happening? This PwC representative says that banks don't really use LIBOR that much, and the new "alternative rate" system ...
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1answer
42 views

Does short sale borrowing rate change during the term of the loan?

If I borrow shares to short, and the initial borrowing rate at the time that I open the position is 10%, will that be fixed until I close the position? i.e. if the borrowing rate increased to 20% ...
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1answer
39 views

When pricing interest rate swaps at inception, should the fixed rate or floating rate be priced first?

In an interest rate swap, when pricing at inception (e.g. making sure the NPV is zero at inception), is the fixed rate set first and then the floating rate calculated (or vice-versa, e.g. floating ...
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1answer
59 views

Will stimulus create an opportunity to raise interest rates? [closed]

I don't know very much about economics myself, but I have noticed two concerns repeated often lately. One is that the recent injection (?) of trillions of dollars of stimulus money into the economy ...
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3answers
204 views

Downside of having a zero-interest loan for long time

I am able to get a zero interest loan (APR 0%) of €10k for my small business and I have to decide the debt repayment period (12-60 months). Mathematically, because interest rate is zero I should ...
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1answer
53 views

Why are savings rates the same as CD rates? [duplicate]

Looking at Ally bank (https://www.ally.com/bank/view-rates/), a 12-month CD has the same APY as a savings account. (9-month CDs are an even lower APY). Money in a CD is locked up for 12-months, with ...
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1answer
85 views

Why we need to substract one period when calculating Present Value?

The question is: Grandparents are funding a newborn’s future university tuition costs, estimated at $50,000/year for four years, with the first payment due as a lump sum in 18 years. Assuming a 6% ...
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22 views

what is the actual OBFR loan rate fee?

The OBFR for March 13 2020 was 1.10%. When a company takes a 1 million over night loan, so they pay 1.1% fee of $11,000, or is it annual like credit card and mortgage where the 1.1% gets divided by ...
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1answer
97 views

Will fixed term mortgage rates follow the cut in Bank of England base rate?

As I am currently looking into buying my first house, I am wondering what the implications of the recent Bank of England base rate cut will have on the rates for mortgages available? I have been ...
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2answers
109 views

How has the modern era of low dividend paying index affect the principles of compound interest?

From my understanding: *To keep it simple, we will keep the asset as index S&P500, not including asset allocation. Compound interest (or compounding interest) is interest calculated on the ...
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1answer
51 views

How to calculate mean annualised returns

I am trying to calculate the mean annualised return for a fund using historical monthly returns but I am having difficulty in finding an appropriate method to do so. Many studies have used mean ...
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0answers
29 views

What would happen if Treasury Yields fell below the effective funds rate?

As far as I understand there should not really be an impact because financial instituitons will still be borrowing at the effective federal funds rate. But would there be any other side effects if ...
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1answer
81 views

Calculating Interest Rate From EMI

Suppose there is a loan with equated monthly installments. If I know the loan period, loan amount and equated monthly installment amount, is there a way to calculate the interest rate? EMI= a * (1 +...
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6answers
457 views

Overpay student loan or mortgage first?

I am aged 23 and make £48000 a year. I have 2 sources of debt at the moment, my student loan and a mortgage I have just entered. Student Loan Details: Amount: £42775.54 Interest Rate: 5.4% Monthly ...
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3answers
2k views

Are lower interest rates bad for the lending perspective of banks?

I know that in times of lower interest rates borrowing from the bank is an easier task at least because its cheaper. However I am not yet convinced why a textbook source is stating that lower interest ...
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1answer
92 views

Finance loan calculation [closed]

I was trying to do some maths in excel, I was able to calculate the amount I will be paying for a 40000USD loan at a 13.9% (7 years) based on amortised scheduled repayments with a constant interest ...
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2answers
234 views

What is the interest rate that the governments bonds move inversely to?

When we talk about "the interest rate" that government bonds move inversely to which is this rate?
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2answers
189 views

Why isn't the highest savings account interest rate in Canada matched by other Deposit Institutions?

I screen shot this website. I'm assuming these Deposit Institutions ("DI") are almost perfectly competitive, because CDIC covers them all to $100 K, and transferring money between banks (cheques or ...
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1answer
59 views

Does the concept of “Swap Point” exist in Forex trading in the UK?

I've just started learning about forex trading. Forex brokers in Japan offer a system called "Swap Point". In my understanding, this value is determined based on the difference between the interest ...
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1answer
145 views

10 year treasury constant maturity rate explained

The 10-year treasury constant maturity rate over 2019 fell from a Max of 2.75 to a Min of 1.50 with an average of 2.15. I want to check whether my understanding of what the figures and the 10-year ...
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1answer
44 views

How much amount is tranferred in market to market settlement of futures?

The book by J.C. Hull gives a proof that if interest rate is constant, futures price is same as forward price (no-arbitrage price). In the proof outlined in the book, scenario of daily settlement is ...
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1answer
102 views

Are Offset Accounts OR Paying of Mortage Going to Give Me a Better ROI

I've been looking into my finances lately (I am an armchair finance person). And it looks to me, that my return on investment isn't going to be the same, if for example, I put $12000 in an offset ...
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1answer
70 views

LIBOR Reform creates Winners and Losers

One phrase I heard of the reform to move away from LIBOR is that it would create winners and losers. Can someone explain how this might happen?
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6answers
9k views

Pay everything now or gradually?

I have around $45,800 is my bank account and have the following three loans: Loan 1: $6,114 with 6.8% interest rate Loan 2: $14,649.21 with 6.8% interest rate Loan 3: $2,927.25 with 5.750% Should I ...
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1answer
77 views

Implications of uncovered interest rate parity condition [closed]

Below i attached the interest rate parity condition in terms of exhange rates. Below i attached the interest rate parity condition in terms of exhange rates. The national interest rate is the euro ...
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0answers
75 views

Interest rate quoting conventions in financial markets

I'm aware that there exist different day count conventions for rates depending on the market but I'm still confused when it comes to the way interest rates are quoted on the market. Example if LIBOR ...
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1answer
193 views

Interest accrued on $2600 security deposit for 5 years

I paid a $2600 security deposit. We were there 5 years. What should my deposit have earned in interest in NY?This particular landlord never gave us any information on an escrow account. He owns ...
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1answer
628 views

What is the Euro 10 yr Swap?

I know that a swap (more specific an IRS) is an OTC product to exchange future payments base on a principal. In this case, the interest on the fixed leg will be computed trying to have a NPV of 0, so ...
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2answers
141 views

How to get the effective yield?

I have a system that calculates the effective yield. The problem is what formula does the system used to calculate the effective yield. I am trying to convert the system into a mobile application. I ...
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3answers
173 views

Interest rates and what does “discount” mean?

I was reading an article that says "Interest rates play an essential role in financial markets. Foremost, they represent the rate at which investors discount risk-free as well as risky future cash ...
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2answers
206 views

Why would I open a low-rate 9 month CD instead of a higher rate savings account?

One specific (popular online) bank is offering a 9 month 1.25% CD, while it's savings account is 1.90%. There's no way I see interest rates tumbling in the next nine months, so why should I -- why ...
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2answers
286 views

Residential Mortgage Tilt Effect

The way I understand the mortgage tilt effect is that the lender "prices in" the expected rate of inflation into the contract borrowing rate, so that the lender is compensated in the earlier years of ...
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0answers
97 views

The Fed Lowered Interest Rates, Are they going to buy Bonds?

The Fed just lowered interest rates yesterday by 0.25%. I haven't heard anyone mentioning a resurgence of quantitative easing (QE). Are they buying bonds in order to influence the interest rate? If ...
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3answers
76 views

Assuming a mortage dependent on interest rate outlook

Purchasing a home. All-cash deal is feasible. I believe that mortgage rates will be rising in the near future, say doubling in ten years. I do not believe mortgage rates will fall. I believe interest ...
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1answer
43 views

How to create a derivative fixed rate loan?

Just curious. Someone mentioned he can only find variable rate loans, no fixed-rate option (somewhere in Europe). Which I find strange, there has to be some price that makes such an offering viable. ...
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2answers
92 views

Calculating Annuities With Different Compounding period and Interest Period

Can anyone Help me solve this? In July 2010, Mike deposits $100 semiannually into an account compounding quarterly at 7% nominal annual interest for three years. In July 2013, he increases the ...

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