# What is the rate of Risk-Free interest?

Risk-free interest is the rate of interest which exists when the expected risk of the economic transaction is zero. In most cases, the general interest rates in major banks of a country reflects the nominal interest rate, which is risk free. The real interest rate is simply the nominal interest rate minus the rate of inflation.

### If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?

Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%

### What is nominal interest?

Nominal Interest A nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate." " Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.

### What does the nominal interest rate mean?

A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.

### How does the real interest rate relate to the nominal interest rate?

A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.

### What is the formula to calculate monthly interest rate if the annual interest rate is known?

Annual Interest Rate divided by 12= Monthly Interest Rate

### What does effective interest rate mean?

An effective annual interest rate considers compounding. When the principle is compounded multiple times each year the interest rate increased to be more than the stated interest rate. The increased interest rate is the effective annual interest rate.

### Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?

Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)

### What is the Formula for simple interest rate?

The answer for rate in simple interest is =rate= simple interest\principle*time

### What is compounding rate?

Compounding rate is the interest rate at which the rate grow faster than the simple interest on deposit or loan made. It is also said "interest on interest".

### What does representative mean with regard to interest rates?

A representative interest rate is an interest rate that is exemplary or acrhetypical rate.

### Are interest rate and rate of return the same?

Yes, the interest rate and rate of return are exactly the same.

### Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?

the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.

### When you are earning interest is it better to have high or low rates?

High rates. However, high interest rates are usually a consequence of high inflation rates and so what matters is not the interest rate but the real interest rate which is the nominal interest rate relative to the inflation rate. Thus a 3% interest rate when inflation is 1% is better that a 5% interest rate when inflation is 4%.

### What is the provident fund interest rate?

The current PF interest rate if 8% Starting April 2012, the rate of interest will be 8.25%

### A borrower is often confrented with a stated interest rate and an effective interest rate What is the difference and which one should a financial manager recognize as the true cost of borrowing?

A stated interest rate is the rate that is available when you are applying. An effective interest rate is the rate that has been applied to the loan. The true cost of borrowing is the effective interest rate.

### Is it better to have a credit card with a high interest rate or low interest rate?

If you carry a balance, then it's better to have a low interest rate. If you do not carry a balance, then the interest rate doesn't matter at all.

### What is the interest rate on loan?

Interest rates are based solely on the severity of your credit. Good credit = low interest rate. Bad credit = higher interest rate.

### What are the two different types of interest rates?

A fixed rate has the same rate of interest the entire life of the loan. A fluctuating rate varies with the prime interest rate.

### What is nominal interest rate minus the expected rate of inflation?

The expected real interest rate.

### What is a fixed rate mortgage?

A fixed rate mortgage is a loan with an interest rate that does not change over time. Whatever the interest rate is when the loan is taken out, will be the interest rate for the entire duration of the loan.

### How do you convert annual interest rate to monthly?

Let i = annual rate of interest. Then i' = ((1+i )^(1/12))-1 Where i' = monthly rate of interest

### Real interest rate vs nominal interest rate?

Real interest rate = nominal interest rate- inflation rate. If a burger in 2007 is for $100 and if the same burger in 2008 is for $110 then Inflation rate is 10% for 2007 If interest rate in 2007 is 13% and in 2008 interest rate is 14% real interest would be only 14%-10% = 4% That is in real value the return on investment is only 4% because purchasing power of 10% is decreased… Read More

### What is the deffination of interest rate?

INTEREST RATE IS THE RATE AT WHICH LOANS AND ADVANCES ARE GIVEN BY THE COMMERCIAL BANKS TO GENERAL PUBLIC. INTEREST RATE IS THE RATE AT WHICH LOANS AND ADVANCES ARE GIVEN BY THE COMMERCIAL BANKS TO GENERAL PUBLIC.

### How do you calculate monthly interest rate on an annual interest rate?

If not compounded monthly, a monthly interest rate is simply 1/12 of the annual rate. Things do get complicated, though if the interest is compounded monthly. An annual interest rate of R% is equivalent to a monthly rate of 100*[(1 + R/100)^(1/12) - 1] %

### How can you estimate interest rate risk?

Interest rate risk is measured by time to maturity and coupon rate

### What is the best nominal interest rate?

Nominal interest rate referes to the rate of interest prior to taking inflation into account. Depending on its application, an inflation and risk premium must be added to the real interest rate in order to obtain the best nominal rate.

### What is the prime interest rate?

The "Prime Interest Rate" is the interest rate used by banks to base all their loan interest rates (and sometimes other interest rates) on and is usually lower than the lowest rate charged on loans to customers with the best credit ratings.

### When a country experiences capital flight what is the effect on its interest rate and exchange rate?

interest rate decreases and exchange rate increases

### What is the difference between flat rate and reducible interest?

Reducible interest means that one only pays interest on the balance of money owing at the end of the month. Flat rate means that interest is calculated on the original load. Reducible interest rate is approx. equal to twice the flat interest rate.

### 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.

### What is an interest rate floor?

An interest rate floor is an option that allows a floor purchaser to limit exposure to decreasing interest rates on its variable-rate investments.

### What is the average interest rate?

As of July 2014, the national average interest rate is 5.159. However, this will change as months go by. The interest rate changes often.

### An interest rate is a special type of?

An interest rate is a special type of income/ profit/ value measurement -- depending on the context in which you're describing the interest rate.

### What is a market interest rate?

The market interest rate is the rate of interest on cash deposits or loan which is determined by the market. Factors such as demand and supply of cash in the market

### Why interest rate has no affect on the aggregate demand?

The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.

### 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.

### IF Covered Interest rate Parity says that interest rate differential equal?

forward/discount rate premium

### Are most deposits fixed rate or variable rate?

Deposits offer only a fixed rate of interest. Though this rate of interest gets changed once in a while, a deposit which was opened before this interest rate change does not get altered. It will continue to earn the same rate of interest as was promised when the deposit was opened.

### What is the standard interest rate on an interest bearing checking account at Chase bank?

The standard interest rate on an interest bearing checking account at a Chase bank is 0.01%. They have a variety of checking accounts with the same interest rate or less.

### What is the daily interest rate if the annual interest rate is 16.75 percent based on 365 days in the year?

If the interest rate yearly is 16.75% then the daily interest rate will be 16.75%. The daily, weekly, monthly, or hourly rate doesn't change from one time frame to the next.

### How can you find the best CD interest rate?

The website Bankrate was able to list the best CD interest rates. Metlife offers a 1.290% interest rate, E-Loan offers a 1.250% interest rate, and Aurora Bank offers a 1.200% interest rate to name a few.

### What is the monthly interest rate for a annual interest rate of 6 percent?

22. The spot Yen/US$ exchange rate is Yen119.795/US$ and the one year forward rate is Yen114.571/US$. If the annual interest rate on dollar CDs is 6%, what would you expect the annual interest rate to be on Yen CDs?

### What is the interest rate to double money in seven years?

If you have an annual interest rate then is 10.405%

### How do you find interest rate?

To find interest rate you multiply the price by the time by the percent

### What is the definition of fixed interest rate?

An interest rate that does not change over the term of an agreement.