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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Determining fair interest rate for an unsecured loan with a non-refund clause [closed]

A startup company is doing a share transfer between a new co-founder and existing co-founders. The new co-founder will purchase the shares from the existing co-founders through a loan agreement ...
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1 answer
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I-Bond Interest Rate Projection in the US

If on 2/1/2023, a person bought $10K (@6.89% I bond rate) I bond and its I bond rate has dropped to 3.79% as of now. The current I bond rate is 5.27%. If this I bond rate of 5.27% drops in the future, ...
HelloDarkWorld's user avatar
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1 answer
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Why it's best to buy fixed-rate annuities when long-term interest rates are significantly higher than short-term interest rates?

Why it's best to buy fixed-rate annuities when long-term interest rates are significantly higher than short-term interest rates?
HelloDarkWorld's user avatar
0 votes
1 answer
128 views

Monthly Rate vs Continuously Compounded Rate

A bank offers two alternative interest schedules for a savings account of $100,000 locked in for 3 years. Which alternative should you choose? (a) a monthly rate of 1% (b) an annually, continuously ...
user546106's user avatar
2 votes
2 answers
144 views

Market Reactions to Federal Reserve's Rate Decisions

Background: During the meeting on December 13, 2023, the Federal Reserve (Fed) decided to keep interest rates at the level of 5.25% - 5.50%. The market's expectation is that interest rates have peaked ...
Tomek Tarczynski's user avatar
11 votes
4 answers
3k views

0 APR Promotional Offer For Credit Cards

I’m currently learning about personal finance and I just found out that there are some credit cards that will give zero interest rate for a certain period of time (10-20 months). I know that to get a ...
Matthew Hua's user avatar
0 votes
1 answer
62 views

Loan: calculate number of monthly payments with fixed annual interest, fixed montly payment, and 1 additional payment per year

The situation is the following. Consider a loan of 430,000 units (dollars or whatever). The client will pay 10,000 units per month. The client will pay an additional 70,000 units every 12th month of ...
Meclassic's user avatar
  • 111
14 votes
3 answers
5k views

Which mortgage should I pay off first? Same interest rate and mortgage length

tl;dr: I have two amortized mortgages; one big and one small. The conditions (interest rate and mortgage length) are exactly the same. Which should I pay off first? I have always heard that you ...
genbatro's user avatar
  • 143
0 votes
6 answers
964 views

Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost

Original loan was for 480k at 3.25% fixed rate for $2,088 monthly payments for 30yrs. We currently owe 458k and have 28 yrs left. We have been paying an additional $100 towards principal each month. ...
Refi Question's user avatar
2 votes
2 answers
210 views

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 ...
Emery Lapinski's user avatar
1 vote
1 answer
89 views

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 = (...
António Gonçalves's user avatar
0 votes
2 answers
141 views

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 ...
user3528438's user avatar
1 vote
1 answer
883 views

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....
JJ S's user avatar
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3 votes
2 answers
357 views

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 ...
kubek's user avatar
  • 31
0 votes
2 answers
132 views

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 ...
Crunk_Cat's user avatar
0 votes
1 answer
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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 ...
CountDOOKU's user avatar
0 votes
1 answer
51 views

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 ...
CREATIVITY Unleashed's user avatar
10 votes
2 answers
3k views

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 ...
7529's user avatar
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7 votes
4 answers
3k views

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 ...
Donut's user avatar
  • 173
6 votes
2 answers
974 views

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% ...
Betterthan Kwora's user avatar
0 votes
4 answers
217 views

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 ...
simplemind's user avatar
2 votes
1 answer
106 views

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 ...
ronald christenkkson's user avatar
1 vote
1 answer
110 views

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)^...
RajS's user avatar
  • 173
3 votes
4 answers
385 views

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 ...
showkey's user avatar
  • 433
8 votes
7 answers
5k views

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),...
cr0's user avatar
  • 287
18 votes
5 answers
8k views

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 ...
SpoiledMustard's user avatar
24 votes
3 answers
6k views

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 ...
Katsu's user avatar
  • 511
0 votes
2 answers
178 views

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 "...
Village's user avatar
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0 votes
1 answer
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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 ...
Aleksandr Hovhannisyan's user avatar
1 vote
2 answers
92 views

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 ...
InfiniteLoop's user avatar
3 votes
1 answer
488 views

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%...
Marium's user avatar
  • 363
2 votes
0 answers
169 views

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: ...
311411's user avatar
  • 245
1 vote
1 answer
230 views

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 ...
HelloDarkWorld's user avatar
0 votes
1 answer
70 views

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. ...
HelloDarkWorld's user avatar
8 votes
2 answers
2k views

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?
HelloDarkWorld's user avatar
10 votes
2 answers
2k views

"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) ...
InfiniteLoop's user avatar
5 votes
1 answer
192 views

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 ...
John H.'s user avatar
  • 85
2 votes
1 answer
209 views

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....
Andy's user avatar
  • 845
20 votes
9 answers
6k views

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 ...
dsollen's user avatar
  • 1,196
6 votes
3 answers
1k views

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 ...
canary_in_the_data_mine's user avatar
-5 votes
2 answers
184 views

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?
Christine Tibig Vickers's user avatar
5 votes
4 answers
2k views

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). ...
7_R3X's user avatar
  • 243
1 vote
0 answers
52 views

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 ...
MJ_Wales's user avatar
  • 111
0 votes
1 answer
41 views

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 ...
paulj's user avatar
  • 1,109
2 votes
3 answers
362 views

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'...
Michael Altfield's user avatar
2 votes
0 answers
58 views

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 (...
cbdeveloper's user avatar
1 vote
5 answers
439 views

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 ...
Chris's user avatar
  • 111
2 votes
1 answer
114 views

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....
Jean-Paul's user avatar
  • 239
0 votes
3 answers
310 views

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 ...
Sybil's user avatar
  • 688
0 votes
1 answer
103 views

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 ...
Underwood's user avatar
  • 101

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