Q: If there is inflation how does this affect LIFO reserves? Does it increase or decrease it?
A: LIFO Last-in-first out is a method used to issue material. It is a method of pricing the issues of…
Q: What is the two-step process can which performs deflation and discounting in market interest rate?
A: The two-step process which performs deflation and discounting is that it makes the cash flows…
Q: Why should we care what the Term Structure of Interest Rates looks like? The Expectations Theory of…
A: The question is to explain the concept of term structure of interest rate, which varies with change…
Q: What is a compounding interest rate?
A: Interest rate is the rate charged by the lender for the amount of money lend by him. Lender can be…
Q: What would cause the annual interest rate to be different from the annual effective rate or yield?
A: Effective Interest Rate: The fixed rate applied to carrying value of the bonds to calculate the…
Q: What is marginal rate (for debt)?
A: Marginal rate of debt is the rate of interest expected by the investors on their debt instruments…
Q: How low can nominal interest rates go? Explain why they can become negative.
A: The nominal interest rate is the interest rate that is calculated before inflation is factored in.…
Q: Explain The Need for an External Interest Rate?
A: There is a strong need for the external interest rate because it helps in making financial…
Q: Discuss how banks benefit when interest rates decrease?
A: Low-interest rate environment- It refers to the state of the economy when the risk-free rate of…
Q: 1. How is a fixed interest rate different from a variable interest rate? When can either be an…
A: Standard Disclaimers“Since you have asked multiple question, we will solve the first question for…
Q: How does a high rate of inflation affect money in all its different roles?
A: Inflation: Inflation is a rate at which the price of the products and services rises. It frequently…
Q: Illustrate the very important relationships between changes in interest rates and varying rates of…
A: It illustrates an inverse relationship amongst the change in the interest rate and the varying…
Q: Which factor determines how much will be saved at different interest rates?
A: The time preference of the consumer for consumption helps in determining the amount that will be…
Q: If interest rates increase, the value of a fixed income contract decreases and vice versa. true?…
A: When interest rate increases, the value of fixed income contract will decrease. This is because…
Q: Why interest rate tends to increases before the crisis and then decline during the crisis? (refer to…
A: During financial crisis the value of financial instruments and assets reduce significantly. To…
Q: What is going interest rate?
A: An interest rate is the rate which is applicable on loan and the borrower has to pay the interest…
Q: Which tend to be more volatile, short- or long-term interest rates? Long-term interest rates…
A: short term interest rates are more volatile than long term interest rate.
Q: What is the difference between a coupon rate, yield to maturity, and current yield? What is Fisher…
A: Concept coupon rate, yield to maturity, and current yield All the above terms are associated with…
Q: What is the concept of present value? How does it affect inflation
A: Increase in general price levels in an economy is known as inflation. Due to inflation, the cost of…
Q: How can we determine the Net Present-Worth Amounts at Varying Interest Rates?
A: Answer: Net present worth is an estimation method applied to various time intervals when cash flows…
Q: Explain the challenges policymakers face when interest rates are very low.
A: An interest rate is referred to as an amount that is charged over as well as above the principal…
Q: Explain The Real Rate of Interest?
A: A real interest rate is an interest rate adjusted to exclude inflation impact to indicate the…
Q: Can the actual real rate of interest be negative? When ? Can the expected real rate be negative?
A: Yes, the actual real interest rate can be negative. This can happen when the actual inflation rate…
Q: Typically, short-term interest rates: А. are more volatile than long-term interest rates В. are less…
A: Short-term interest rates are usually averages of daily rates, calculated as a percentage. The…
Q: What is the process of solving a cash flow for an unknown interest rate?
A: Time Value of Money: According to the concept of TVM, the company always interested to know the PV…
Q: When the quantity of a financial security supplied or demanded changes at every given interest rate…
A: Explanation: Interest rate shifts (i.e., the price of financial capital) are creating a shift along…
Q: Can real interest rates be negative
A: The real rate of return is calculated to ascertain the actual return on investment considering the…
Q: Explain how higher interest ra increases the rate of inflation.
A: Generally, higher interest rates increase the worth of a given country's currency. the higher…
Q: advantages of negative interest rate policies?
A: There are pros and cons of negative interest rate policies. In fact, in my opinion negative interest…
Q: How would an increase in the interest rate or a decrease in the number of periods until the payment…
A: Interest rate is defined as an amount of an interest due per period as the proportion of amount,…
Q: Why do most firms use a market interest rate?
A: The effective annual rate of interest is the actual or the real rate of interest paid or received…
Q: When does the present economy studies do or use? a. When interest rate is not given b. When time…
A: Economy studies is defined as the study, which used to provide the framework as well as the ten most…
Q: Which one of the following statements is correct? A. Real rates must exceed inflation rates. B.…
A: Meaning of the terms: Real rates: Real rate=Nominal rate - Inflation . So, real rates consider…
Q: How can we compare interest rates that are compounded differently?
A: Solution Concept interest rates that are compounded differently The number of…
Q: By which symbol is the break-even interest rate denoted?
A: Break-even interest rate is the maximum rate of interest before negative leverage.
Q: What makes it so difficult to correctly forecast interest rate changes?
A: Interest rates are used to understand price and value of money. Interest rate is the cost incurred…
Q: Define the term break-even interest rate?
A: The question is to define break even interest rate. The concept of Break even interest rate is…
Q: Were low-interest rates the underlying cause of the financial crisis? Explain.
A: Financial crisis A financial crisis refers to a condition when there is a significant decrease in…
Can nominal interest rates be negative?
Step by step
Solved in 4 steps
- Interest rate risk is the potential for investment ( ) that result from a change in interest rates. If interest rates ( ) , for instance, the value of a bond or fixed-income instrument will decline.What is negative inflation premium?How does interest rate risk differ from reinvestment rate risk? Why is the difference important?
