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
590
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For this I-bond calculation there's a tiny adjustment to the rate (fixed rate x semiannual inflation rate) it barely changes the rate.Why is it there?
From https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/#cerates
Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation ...
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If APY factors compounding (while APR doesn't), shouldn't APY always be higher than APR?
So, from what I understand:
APR: rate advertised to borrowers (without compounding)
APY: rate advertised to lenders (with compounding)
So, for a loan with APR of 6%, that compounds monthly:
APY = (...
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2
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How do I hedge against continued rate hikes for a mostly bond portifolio?
I now have around $150k invested in a few mutual funds, whose holdings are mostly international and and investment-grade corporate bond. Now those funds are down 15% since the federal rate hike and ...
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How do I calculate the interest rate on my Treasury bill given an evaluated price?
Ex: I'm looking at the 3 month (13-week) Treasury bill here, maturing 11/16/2023. The evaluated price is 98.617417.
So is the interest rate:
(100 - 98.617417)/98.617417 * (365/(13 * 7)) * 100 = 5....
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2
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Is overnight rate swap ETF viable alternative to low-risk bank products?
I live in a eurozone country. While the ECBs deposit facility rate is 3.75%, interest rates on savings accounts and similar low-risk products are less than 1% with the best offer being 2%.
Overnight ...
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2
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126
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Optimizing between Mortgage and Bonds
Lets say I have $1 million owing in my mortgage, current variable rate of 6.1%, remaining amortization 38 years. I also have 1$ million in GIC (basically bonds where the coupon can get added to ...
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1
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What happens if the volatility in the equity market increases? Does interest rates move up or down?
I think both can happen and here is my reasoning. Please correct me if I am wrong.
During times of increased volatility in the equity market, investors adopt a more risk-averse approach and gravitate ...
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1
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Interest rates effect on bank jobs and junk funds from the book intelligent investor
On chapter 6 of the intelligent investor with commentary by jason zweig Pg:147 is discussing about junk bonds. I ran through the text however I have some curiosity that I want to get addressed.
Here ...
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Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?
From what I understand, long term certificates of deposit (CDs) typically offer higher interest rates than short term CDs. They do that to give you a reason to lock up your money for a longer period ...
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How to compare loan interest rate to savings account interest rate?
I don't understand how to compare my loan's interest rate to my savings account interest rate.
My savings account states:
The Interest Rate on your account is 4.0249% with an Annual Percentage Yield ...
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Why does a 5% down payment get me a lower mortgage interest rate than 20% down?
I recently received a letter from my (US) bank, saying that I was prequalified for a mortgage. There were two options, both 30 year fixed rate, for the same home price total:
5% down, with a 6.093% ...
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4
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Does the expected return of a stock ETF depend on the current interest level? At which interest rate are stock ETFs no longer recommended?
Is there an interest rate such that there is no point in putting money into the stock market (e.g. in a stock ETF that models the stock market) but where the interest rates of almost risk-free ...
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1
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Structured investment CMS rate
There's a structured investment I've seen based on interest rates with this formula for it's floating portion:
6*(USD SOFR CMS30Y - USD SOFR CMS5Y).
Based on my rudimentary understanding, SOFR is a ...
1
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1
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Calculating CAGR for Ordinary annuity
Basic compounding interest question:
I paid 5000 every month for 12 months and got 67500 in return, what was the annual compounding intereset rate?
I considered formular as follows:
FV = PMT(((1+r)^...
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4
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How can calculate the special cash flow's irr with excel or python accurately?
It's simple to calculate the following cash flow's irr:
cash flow date
-150000 2023-03-30
575 2023-04-30
594.17 2023-05-30
575 2023-06-30
594.17 2023-07-30
594.17 ...
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7
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When is it worth taking out a loan for something I could pay in cash?
I'm trying to better understand the time-value of money and how to compare interest rates vs. investment returns.
In general, if I can pay for something in cash or short-term credit (paid off monthly),...
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5
answers
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I have to pay back my student loan. When is the best time to do it?
Today, I received the news that my "Payback phase" for my student loan has begun. I was afraid this day would come soon, but it came quicker than I anticipated. However, I got the news that ...
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3
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If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?
If US Treasuries at yielding 4-5% right now, why can't I find a 1 month US Bond ETF or 6 month US Bond ETF that yields 4-5%? The best I can find is SGOV but it only yields 2%.
Picture of US yields on ...
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Why is nobody offering me the sample APRs when I have excellent credit?
I have been tried to get pre-approval for an auto loan from different companies like Carmax and Carvana. Before I applied, they had a calculator to estimate payments, and the asterix, it says "...
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How are the income conversion factors for 3%, 5%, and 7% interest rate calculated for retirement income in the U.S.?
I'm reading the U.S. Department of Labor's PDF Taking the Mystery Out of Retirement Planning. Page 17, Worksheet D, asks the reader to take their total estimated savings in different retirement ...
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Which mortgage rates and how soon get affected by Fed's hikes/drops?
I know that Fed doesn't set mortgage rates directly, but they usually follow Fed's policy.
My question is: How soon do mortgage rates go up after Fed's rate hikes, and do Fed rate hikes affect all ...
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How do I determine Interest Rate of 4-Week Treasury Bill
I purchased 4 week treasury bill for $2220
Treasury will take out $2212.4545 from my Bank account
Treasury says Investment rate = 4.446% and High rate = 4.370%
But I calculate interest rate as 4.43361%...
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2
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0
answers
120
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The interest rate of a (U.S. Treasury) "Floating Rate Note" (FRN)
I am having trouble to reproduce the calculation of the interest rate of a (U.S. Treasury) "Floating Rate Note" (FRN). Can you help me to find my error?
The calculation is described here: ...
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Calculation for current value of Ibond in TreasuryDirect
I have purchased I bond from TreasuryDirect in the amount of $10K in 8/2021 and 1/2022, totaling $20K. Currently, TreasuryDirect shows the interest rate of 9.62% for my 8/2021 purchase and 6.48% for ...
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1
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What is the relationship between Feds Fund Rate vs. Certificate of Deposit Rate in the US?
I've noticed the Fed in the US has increased their Fed Fund Rate and the banks in the US have also increased their rates in the Certificate of Deposits (CD) from 0.XX% to 4.XX% since 2021 until now.
...
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Why did the composite rate for I bonds issued drop to 6.89% from 9.62% when the Fed has been increasing interest rate?
Why did the composite rate for I bonds issued drop to 6.89% from 9.62% when the Fed has been increasing interest rate? What is the correlation between I bonds rate and Feds fund rate?
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"full balance due" vs "statement balance" vs "pay in full"
I wanted to pay off my credit card, and at the "Select Payment Option" screen at my bank presents the following options:
=============
MINIMUM ($163.00)
MINIMUM PLUS PAST DUE ($163.00)
...
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5
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1
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142
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How to determine what would be considered a good rate for 4-52 week Treasury bills?
According to the information provided by treasurydirect.gov, currently the rates for any Treasury bill ranging from 4-52 weeks are all above 4% (expressed yearly).
Looking at the 10 year/3month ...
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1
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Why are nearer dated corporate bonds yielding less than U.S. treasuries?
My understanding is that U.S. Treasuries are considered as close to risk free as you can get and in some places this yield is used in place of the "risk free rate" in performing calculations....
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What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?
I have a friend whose new wife is paying an absurdly high interest rate on her auto loan. They've asked if I was willing to loan them money at a more reasonable rate to pay off that loan and have ...
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3
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Adjustable Rate Mortgage (ARM) in 2022?
I'm looking to purchase a home for my primary residence, and I've talked to several mortgage lenders. They all are strongly recommending a 10-year Adjustable Rate Mortgage (ARM), because they say that ...
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2
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Could anyone help me how much my profit would be in 5 years if I start at $1000 and they said it would have a 5% income each year? [duplicate]
If I am to earn 5% annually and I started with $1000, how much would I have after 5 years? Is it too good to be true?
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Help me calculate if this money is safe against the inflation
My friend invested in a 10 year insurance-investment plan where he pays a yearly premium of 30,000 for 5 years and keeps the money for another 5 years (He cannot withdraw the money for this period). ...
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0
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When will interest rates on savings accounts increase (UK) [closed]
Note: question related to UK savings accounts
4 days ago the Bank of England increased the bank rate from 2.25% to 3% which I understand will increase interest rates on mortgages and savings accounts ...
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1
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Calculating difference in "APY" between assets
Treasuries are not taxed at state and local level.
Munis are not taxed at any level at times.
What formula is used to compare APY between different investment assets, given:
CD, Treasuries, Munis at ...
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2
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3
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What does it mean when I read in the news that interest rates were lowered or raised?
I was reading the newspaper, and an article mentioned that the government was going to lower interest rates. What does that mean?
I'm confused because the news always assumes that you know what they'...
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0
answers
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The formula for a decreasing annuity (discounted by an interest rate) term life insurance?
Sometime when you are getting a quote for a term life insurance, they offer you 3 options:
For a period T, and amount insured A.
Fixed (payout is always A in the entire period T)
Linear desceding (...
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What’s the real benefit of taking loan when interest rate is lower than inflation
This question is particularly regarding taking out a loan for a specific purpose, let’s say buying a car.
I understand that when taking out a loan when inflation is high and interest rates are low you ...
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1
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Do mutual funds get interest on the cash positions in their portfolio?
I am writing a paper about mutual funds and I was wondering if mutual funds get paid interest on the cash positions they have in their portfolio. If so, what kind of rate would this be?
Do funds use e....
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3
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A change in trend towards end 2022? Don't invest money in the stock market anymore, but leave it in a savings account? [closed]
Many in this community and other forums recommend S&P500 and some other index funds. After the index fund fell sharply, I also thought now is the opportunity to enter.
But now I read in the news ...
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1
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How to calculate Average CAGRs?
I have sales by 30 different products over years (2015-2022). I need to compute Compound Annual Growth Rate, however some of the product groups have high CAGR and some of them have quite low CAGR. So ...
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2
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What Incentives are stopping banks from raising their prime rate?
In Canada, banks set their prime rate which affects the lending rates for many of their products including variable-rate loans. Many sources say that the Bank of Canada's (BoC) interest rate ...
user118726
0
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3
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Is it possible to swap homes without refinancing (without changing interest rate)?
I'm curious to know if it is possible to trade homes with someone, and assuming the homes are approximately the same value, if the swap can be completed without refinancing (namely, without the ...
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At 3% inflation rate, is $100 today worth $40 20 years ago?
I'm little bit confused... At 3% inflation rate, is $40 20 years ago worth $100 today? Is it as simple as adding 60% of $100 to get the worth of currency 20 years ago?
Forgot about compound interest.....
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2
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Is this a weekly compounding loan amortization schedule?
I am currently having a disagreement with my colleagues regarding whether a loan is compounding or not.
I have linked below an image of a amortization schedule for a 52 week term for a $50,000 loan. ...
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1
answer
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Central Bank Interest Rate Hikes in Canada impact on Fixed/Variable Rates
Note: This is my first property purchase so forgive the n00b question
I plan to sign at the notary for the purchase of a condo in the upcoming months. The condo was under construction for the past ...
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1
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Is this simplistic interest rate used?
Suppose A is the initial investment, r is the interest rate (r > 0). The target interest rate model is then A(1 + r)^t, where t is the time since the moment at which the interest rate started to ...
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Why are returns on term deposits so much higher in Canada (than in other countries)?
If one searches for GICs (Canadian equivalent of a term deposit) on the Canadian financial service comparison site ratehub.ca for 3 year deposits with 10 000 CAD as investment capital, one will come ...
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3
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2k
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Scenarios in 10 years of fixed vs. adjustable rate mortgage (ARM) at the same rate?
I would like to get a list of possible scenarios when it comes to refinancing that I might not have known or considered at the end of the adjustment period. I am new to mortgages and ARMs
I am ...
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3
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1
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Effective interest rate of two loans
Let's say I have two loans and want to calculate the "effective" interest rate. To make things easy let's assume they have the same principal and the same terms (30 years), just two ...
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