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Discount rate = inflation expectation + risk premium for the investment, so when inflation goes up, your discount rate should go up
Wiki User
∙ 13y ago
Wiki User
∙ 13y agoWhen inflation threatens, a discount-rate increase tends to dampen economic activity because then banks charge higher interest rates to borrowers.
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What describes the most likely effect of the Fed lowering the discount rates on overnight loans?
An increase in the money supply
Why did the federal reserve raise interest rates in 1928 and 1929?
From 1923 to about 1928, the feds had kept the rates artificially low, but this increased the chance of runaway inflation, so it had no choice but to raise it again.
Raising the discount rate to members banks will in turn cause the member banks to raise interest rates to their own customers?
Prime Rate ---- the rate at which banks lend money to each other and the Federal Reserve lends money to banks
What are the three ways the fed can increase money supply?
Open market operations ( purchasing bonds), Discount rates ( lowering the interest rates) and Reserve requirement.
When cash flows have been adjusted for inflation but that the discount rates are nominal will this lead to an underestimation of NPV.?
Yes.
What describes the most likely effect of the Fed lowering the discount rates on overnight loans?
An increase in the money supply
Raising the discount rate to member banks will in turn cause the member banks to raise interest rates to their own customers?
monetary policy
Where can you find online discount hotel rates?
"There are several different websites that you can look for discount hotel rates. Some of these websites include hotel-rates, expedia, hotwire and orbitz."
What will the federal government do in an attempt to encourage saving and investing?
RAiSE diVidENd RAtES. . .A+
Will a parking ticket raise insurance rates?
Generally parking violation will not effect your insurance. These are not considered moving violations and thererfore will not increase the premiums.
Can trade discount rates change?
hi, yes offcourse trade discount rates can be changed but they should be changed according to a set pattern only. thankyou
Does attending Second traffic school affect insurance rates?
Are you attending this second traffic school to get a point taken off your record....it so then NO it will not affect your rates....but if are just taking the class then no it will not effect your rates.....unless you take a defensive driving course, then you may get a discount on your insurance.
What does factoring rates mean?
Factoring rates apply to the practice of businesses selling receivables at a discount to a factor, who then collects the funds. The factoring rate is the amount of the discount at which the receivable is purchased.
Does federal reserve sysytem effect the fixed rate directly?
Directly? What does that mean? The Fed has several ways to raise interest rates. When they do something that raises rates that effects big banks and little banks alike promptly and these raise their rates. Over time, too, adjustable loan rates reset to the new higher rate (or lower rate) but this takles more time as the reset annual date is reached on each loan.
Will a traffic ticket for cutting corners raise your insurance rates?
A traffic ticket could raise your insurance rates. It won't raise them right away, but may come into play when the insurance is being renewed.
What is the effect of single and discount series?
Of what?
Is there any discount in flight rates for paramilitary person?
There is some discount in flight rates for paramilitary person in some flights. Some get as much as 50% discounts on various classes of certain flights.
