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
449
questions
0
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1answer
41 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% ...
0
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0answers
17 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 ...
1
vote
1answer
89 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 ...
1
vote
2answers
99 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 ...
1
vote
1answer
46 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 ...
0
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0answers
28 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 ...
1
vote
1answer
63 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 +...
3
votes
6answers
441 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 ...
14
votes
3answers
1k 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 ...
1
vote
1answer
91 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 ...
2
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2answers
227 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?
2
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2answers
157 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 ...
0
votes
1answer
58 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 ...
0
votes
1answer
97 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 ...
0
votes
1answer
35 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 ...
0
votes
1answer
87 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 ...
1
vote
1answer
63 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?
19
votes
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 ...
1
vote
1answer
44 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 ...
1
vote
0answers
68 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 ...
1
vote
1answer
192 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 ...
1
vote
1answer
340 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 ...
1
vote
2answers
138 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 ...
3
votes
3answers
165 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 ...
3
votes
2answers
200 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 ...
1
vote
2answers
197 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 ...
2
votes
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 ...
2
votes
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 ...
0
votes
1answer
41 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. ...
2
votes
2answers
84 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 ...
34
votes
7answers
12k views
Can I lend a small amount of my own money to a bank at the federal funds rate?
I have a dollar that I won't be needing tonight, and I hear that banks are in the market for short-term loans. In fact, the present Fed funds rate is higher than the interest rate on any savings ...
29
votes
8answers
14k views
What stops you from using fixed income in developing countries? [duplicate]
I was recently visiting a developing country and noticed that their interest rates are very high — ~15% with government bonds promising ~13% annually. I was just thinking, if the bid ask spread for ...
0
votes
1answer
126 views
How is Barclays Everyday Saver interest rate calculated
I searched online and they said it's 0.25%-0.30% per year.
But since my balance is ever-changing, how do they really calculate the interest? Do they just snapshot your balance on a certain day of a ...
3
votes
3answers
269 views
Why would one buy a bond with negative rate? [duplicate]
I see presently that many countries outside the U.S. have negative rate government bonds. So you buy one for $101 and in 5 years you get $100 back (face value). (I picked numbers for simplicity).
I ...
6
votes
3answers
640 views
Why does the Fed change rates in quarter points rounding?
I have always seen( since 1990s) that the Fed changes( cut/increase) interest rates in quarter point increment /decrements in USA that affect the world bond, stock market and borrowing rates, while I ...
4
votes
2answers
293 views
what is the possibility of USA having negative interest rate [closed]
There has been attempt at reducing the interest rates. Apart from, elderly and savers depend on the bank interest and Stock market is driven by interest rates, the true cost of money if becomes ...
0
votes
2answers
232 views
Why Do People Continue Using Expensive Payment Services Like Paypal And Western Union [closed]
Paypal - the 'industry standard' for online payments makes this opportunity inaccessible to Africans in most cases. Most, who qualify to be a part of the workforce for some internet companies are not ...
1
vote
3answers
260 views
Why does bond price go up with interest rate decrease?
I understand that a decrease in prevailing market interest rate causes a downward pressure on the bond yield and, equivalently, an upward pressure on the bond price. But what if a decrease in interest ...
0
votes
1answer
42 views
How to calculate equivalent interest rate of gains with monthly contributions?
I started the year with a known amount of funds in my account and I make regular (assume equal) monthly payments into the account.
I know how much my gain/interest for the year is. I believe the ...
9
votes
1answer
2k views
Yield on municipal bonds versus treasury
I'm looking right now at the yields in Municipal bonds and Treasury bonds on Bloomberg: https://www.bloomberg.com/markets/rates-bonds/government-bonds/us and I see that yields on Municipal bonds are ...
2
votes
5answers
187 views
Definition of compound interest
The textbook by John Hull (9/e) describes "quarterly compounding" on page 80:
If the interest rate is measured with annual compounding, the bank’s
statement that the interest rate is 10% means ...
1
vote
1answer
144 views
Term deposits in Sri Lanka have a high interest rate - what's the catch?
This website here shows a comprehensive comparison of term deposit rates in Sri Lanka.
Currently you can get a 12 month term deposit at a rate of 10.75% with an AA+ rated bank.
Compare this to ...
1
vote
1answer
178 views
Taking a loan with a low interest and putting it into a Savings deposit with High interest [duplicate]
Can I make money from taking out a loan from a country with a low interest rate (such as Switzerland, that has an interest rate for loans from 4.9%) and put it into a fixed savings deposit account in ...
5
votes
1answer
222 views
Fed funds rate and probability of a recession
From an article today on Investopedia:
Bonds Signal up to 60% Chance of Recession
Earlier in 2019, the Federal Reserve announced a pause in its program of interest rate hikes, re-energizing the ...
1
vote
0answers
63 views
Eurodollars: How many days in 3 month LIBOR?
The CME webpage states that Eurodollar futures settle to 3 month LIBOR:
My question is regarding the underlying LIBOR term deposit rate mentioned in the contract spec. Suppose today is Tuesday, Feb ...
1
vote
1answer
106 views
What kind of interest rate is used on treasury bills?
Let me use an example.
If we say the yield to maturity of 1 month treasury bill is 2.414% now, what exactly does it mean?
In actuarial notations, this number can mean effective interest rate (APY), ...
0
votes
1answer
1k views
How to get information about LIBID rate?
I can find the information regarding LIBOR rate, for example like in this link, but I can't find anything about LIBID rate even though there are many sites providing the LIBID definition. Can anybody ...
1
vote
2answers
201 views
Bonds, interest rates and inflation
I was reading Learn to Earn by Peter Lynch and I came across a paragraph that has confused me to say the least. It is regarding bonds -
If you buy a $10,000 ten-year bond and hold it for ten years,...
1
vote
1answer
65 views
Bond prices changing due to interest rates
I feel as if I'm missing a fundamental step here. I'm aware that bond prices fall as yields go up; but what makes yields go up?
If I had a bond issued in the UK for example, and the base rate went up ...
1
vote
1answer
301 views
Formula for previous months interest payment and balance - Reverse Amortization
I am trying to resolve an issue I am having where a system calculated incorrect additional payments on a loan for a couple of months, resulting in the new current balance being incorrect. I want to ...
