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What does it mean when market rate is higher than contractual rate?
Wiki User
∙ 12y ago
Its when people are paying more for contract work then the company would noramlly charge, usually due to demand.
Wiki User
∙ 12y ago
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When a bonds stated interest rate is less than the market interest rate is the rate at a discount or premium?
When the coupon rate (the contractual periodical "interest" payments) are lower than the yield (the market required return) the bond will be in discount. This discount makes up for the low value of the coupons.
How would you define the market rate for a bond?
The actual interest rate, however, determined at auction, is referred to as the market rate. The market rate may equal the stated rate, or it may be higher or lower.
What occurs when a bonds stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
To earn a higher interest rate what trade off will you likely have to make?
A money market account is an account that earns a higher rate of interest when you carry a larger balance, resulting from large deposits.
What does policy rate mean?
In economics, the policy rate (policy interest rate) is the short-term interest rate that the central bank manipulates through open-market operations. Open-market operations include the sale and purchase of bonds. During times of recession, the central bank favors a low policy rate that would help close the GDP gap. When a country is experiencing heavy economic growth, the central bank tends to favor a higher policy rate that would curb inflation.
What is Contractual interest rate on a bond?
The contractual interest rate is the rate at which the borrower pays and the investor receives are determined.
How would you define the market rate for a bond?
The actual interest rate, however, determined at auction, is referred to as the market rate. The market rate may equal the stated rate, or it may be higher or lower.
When a bonds stated interest rate is less than the market interest rate is the rate at a discount or premium?
When the coupon rate (the contractual periodical "interest" payments) are lower than the yield (the market required return) the bond will be in discount. This discount makes up for the low value of the coupons.
How is the currency rate decide?
The currencies rate is decided by the supply and demand of the market. The higher the demand, the higher the price and vice versa.
What is a contractual interest rate on bond referred as?
The "Coupon"
What does 'the going rate' mean?
Present market value
What occurs when a bond's stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
What occurs when a bonds stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
Difference between market growth rate and market share?
kjo - What? Thomas, what doest that mean?
Why is it that market size is one of environment constraints?
The macro-environment of a business is characterized by external factors that influence business growth either positively or negatively. The size of the market in which the business operates is one of the external factors and it serves as a constraint to growth because the size of a market determines the volume of sales.. for instance, if the market size is big and growing constantly at a higher rate, then sales is expected to be big, while a small market size with low growth rate will mean a low sales.. Market size in business is used to describe "the number of potential customers." thus, the higher the market size the higher the sales and the lower the market size, the lower the sales.. that is why market size is an environmental constraint for businesses..
To earn a higher interest rate what trade off will you likely have to make?
A money market account is an account that earns a higher rate of interest when you carry a larger balance, resulting from large deposits.
Why is the black market exchange rate higher than the official exchange rate?
Because there is no regulation in the black market, besides these traders in the black market do not not pay any trading fees, and at least a quarter of the amounts traded on the black market are fake currencies hence traders are able to offer better spreads for their currencies. I mean if they can buy a fake dollar at 50 pence, they can afford to sell it at 60 pence when the official rate is at 80 pence.
