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%
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.
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.
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.
Annual Interest Rate divided by 12= Monthly Interest Rate
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)
The answer for rate in simple interest is =rate= simple interest\principle*time
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".
A representative interest rate is an interest rate that is exemplary or acrhetypical rate.
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.
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%.
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.
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.
Interest rates are based solely on the severity of your credit. Good credit = low interest rate. Bad credit = higher interest rate.
A fixed rate has the same rate of interest the entire life of the loan. A fluctuating rate varies with the prime interest rate.
The expected real interest rate.
an interest rate changes with time
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.
Let i = annual rate of interest. Then i' = ((1+i )^(1/12))-1 Where i' = monthly rate of interest
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
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.
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] %
Interest rate risk is measured by time to maturity and coupon 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.
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
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.
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.
An interest rate floor is an option that allows a floor purchaser to limit exposure to decreasing interest rates on its variable-rate investments.
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 income/ profit/ value measurement -- depending on the context in which you're describing the 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
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
The contractual interest rate is the rate at which the borrower pays and the investor receives are determined.
forward/discount rate premium
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.
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.
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.
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?
Effect of interest rate on consumer finance?
If you have an annual interest rate then is 10.405%
monthly interest rate
To find interest rate you multiply the price by the time by the percent
interest rate for jewell loan
An interest rate that does not change over the term of an agreement.