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When the economy is growing, interest rates typically go up. This is because increased economic activity can lead to higher inflation, prompting central banks to raise rates to keep inflation in check. Additionally, as demand for borrowing increases during economic expansion, lenders may raise rates to capitalize on the heightened demand.
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What is asset demand for money?
Asset demand for money is dependent on interest rates. The money slope goes down if interest rate goes down. In contrast, money slope goes up if interest rate goes up.
How does the price of copper affect Chile's economy?
When the price copper goes down, the Chile economy also goes down. The Chilean economy relies heavily on copper; almost 20% of its exports and GDP is based on copper, so when it goes down, the economy is effected as it goes down.
What is floating rate bond?
A floating rate note (FRN) is a bond whose coupon (interest) goes up and down with market rates.
Are market interest rates and bond prices are related?
They are inversely realtes, i.e, when one goes up, the other one comes down.
Why sometimes low interest rates fail to stimulate economy?
Manipulating interest rates have historically been used by the Federal Reserve Bank(Fed) in attempts to stabalize the nation's economy for many, many years. When the economy is growing, the Fed raises short term interest rates to slow down inflation. Invesly, when the economy goes bust, they lower the interest rates to spur lending, investment, and consumer spending. However, our latest, and convincingly most dramatic recession is spawning new challenges for the Feds. One such side-effect of this global financial crisis is frozen credit - the balance sheets of banks are simply too congested and no one is willing to lend money to each other. Is this respect, Fed chairman Ben Bernanke's recent near-zero interest rates have failed to encrouage banks to lend to businesses, invidivuals, and other banks - there's simply no certainty that anyone will be paid back. In the past however, as recently as the begining of this century, former Fed chairman Alan Greenspan attempts at spurring the economy through low interest rates(after the dot-com crash of 2000) HAVE succeded as evidenced by the housing boom(2002-2007). The housing boom is responsible for subprime lending - the heart of the financial crisis and credit freeze we're now experiencing. Low interest rates won't work this time, so go fish, Bernanke!
How do financial institutions calculate interest rates?
Financial institutions base their interest rates on fluctuation of today's market. If the market is doing well then interest rates are high. If the market is down, interest rates goes down along with it.
What is asset demand for money?
Asset demand for money is dependent on interest rates. The money slope goes down if interest rate goes down. In contrast, money slope goes up if interest rate goes up.
How has the current housing crisis affected mortgage rate?
Mortgage rates or the interest rates for home loans are affected by a variety of factors. More often than not, they are influenced by supply and demand. A strong economy results in more borrowing which in turn results in higher interest rates. Conversely, with the softening of an economy, borrowing goes down and so does interest rates. The Federal Reserve can also influence interest rates through raising or lowering the discount rate which is the interest rate banks are charged when they borrow money from the Federal Reserve. Read more http://www.housingnewslive.com/mortgage-rates.php
How does one's economy be affected by interest rates hike or cut?
because when the interest rate goes up means there is a good economy and banks making money. when the interest rate is low banks are lossing money so they out it down to get as many people in to their bank. the consumers are also not spending as much whih is effected by retail sales.
What is float rates?
A floating rate note (FRN) is a bond whose coupon (interest) goes up and down with market rates.
Do fixed bonds have higher rates than bonds with fluctuating interest?
Fixed bonds don't necessarily have higher rates than bonds with fluctuating interest. An interesting feature of bonds is that their rates tend to go down as interest rates in general go up. A fixed rate bond will yield the same return no matter what the economy does, but a fluctuating interest bond's rate could go up if the general interest rate goes down or vice versa. So really, the important determining factor of which type of bond performs better is the economy in general.
How do interest rates affect the price (Value) of bonds?
Yields and Price for bonds are inverse. So when price goes up yield goes down. When price goes down , yield goes up. The coupon always remains fixed.
How does the price of copper affect Chile's economy?
When the price copper goes down, the Chile economy also goes down. The Chilean economy relies heavily on copper; almost 20% of its exports and GDP is based on copper, so when it goes down, the economy is effected as it goes down.
What is floating rate bond?
A floating rate note (FRN) is a bond whose coupon (interest) goes up and down with market rates.
Are market interest rates and bond prices are related?
They are inversely realtes, i.e, when one goes up, the other one comes down.
Why sometimes low interest rates fail to stimulate economy?
Manipulating interest rates have historically been used by the Federal Reserve Bank(Fed) in attempts to stabalize the nation's economy for many, many years. When the economy is growing, the Fed raises short term interest rates to slow down inflation. Invesly, when the economy goes bust, they lower the interest rates to spur lending, investment, and consumer spending. However, our latest, and convincingly most dramatic recession is spawning new challenges for the Feds. One such side-effect of this global financial crisis is frozen credit - the balance sheets of banks are simply too congested and no one is willing to lend money to each other. Is this respect, Fed chairman Ben Bernanke's recent near-zero interest rates have failed to encrouage banks to lend to businesses, invidivuals, and other banks - there's simply no certainty that anyone will be paid back. In the past however, as recently as the begining of this century, former Fed chairman Alan Greenspan attempts at spurring the economy through low interest rates(after the dot-com crash of 2000) HAVE succeded as evidenced by the housing boom(2002-2007). The housing boom is responsible for subprime lending - the heart of the financial crisis and credit freeze we're now experiencing. Low interest rates won't work this time, so go fish, Bernanke!
When the price of copper goes down how does that effect the economy in Chile?
The economy of Chile suffers
