Examples of market rate in the following topics:
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- A market interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender in the market.
- In a free market there will be a positive interest rate.
- If the inflationary expectation goes up, then so does the market interest rate and vice versa.
- Different investments effectively compete for funds, boosting the market interest rate up.
- The greater the risk is, the higher the market interest rate will get.
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- Floating rate bonds are bonds that have a variable coupon equal to a money market reference rate (e.g., LIBOR), plus a quoted spread.
- Floating rate bonds (FRBs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (i.e., quoted margin).
- A FRB has a duration close to zero, and its price shows very low sensitivity to changes in market rates.
- Thus, FRBs differ from fixed rate bonds, whose prices decline when market rates rise.
- In the wholesale markets, FRBs are typically quoted as a spread over the reference rate.
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- Price risk is the risk that the market price of a bond will fall, usually due to a rise in the market interest rate.
- Fixed-rate bonds are subject to interest rate risk, meaning that their market prices will decrease in value when the generally prevailing interest rates rise.
- When the market interest rate rises, the market price of bonds will fall, reflecting investors' ability to get a higher interest rate on their money elsewhere — perhaps by purchasing a newly-issued bond that already features the new higher interest rate.
- Unless you plan to buy or sell them in the open market, changing interest rates do not affect the interest payments to the bondholder, so long-term investors who want a specific amount at the maturity date do not need to worry about price swings in their bonds and do not suffer from interest rate risk.
- An unanticipated downgrade will cause the market price of the bond to fall.
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- Calculate the real interest rate if the nominal interest rate equals 90% while the inflation rate is 100%.
- You will prove the Fisher Equation and the impact of expected inflation on the market interest rate and the bond's price.
- Draw a loanable funds market with an equilibrium interest rate of 7%.
- Draw a loanable funds market with an equilibrium interest rate of 7%.
- What would happen if the world's interest rate is 5%?
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- In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, or rate) between two currencies is the rate at which one currency will be exchanged for another.
- Exchange rates are determined in the foreign exchange market, which is open to a wide range of buyers and sellers where currency trading is continuous.
- In the retail currency exchange market, a different buying rate and selling rate will be quoted by money dealers.
- In the retail currency exchange market, a different buying rate and selling rate will be quoted by money dealers.
- Explain the concept of a foreign exchange market and an exchange rate
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- We include these costs in the bond's market price and interest rate, and they raise the cost of borrowing.
- Both markets start with the same level of information, and consequently, the bond prices and interest rates are identical.
- We depict the bond markets in Figure 3.
- The equilibrium bond prices are identical for both markets and equal P* and the interest rates would be equal.
- Thus, investors are attracted to the low-information cost bonds, boosting their demand for low information cost bonds, increasing the market price and decreasing market interest rate.
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- Factors such as corporate tax rate, interest rate fluctuation, and conditions of the economy and markets are external factors of the WACC.
- This rate is actually determined by the market and is not explicitly mandated by the Fed.
- Therefore, the Fed tries to align the effective federal funds rate with the targeted rate by adding or subtracting from the money supply through open market operations.
- Market conditions refer to the demand for higher rates of return by investors, which will increase the cost of capital.
- For example, if we raise capital with a security that is not highly marketable, investors will require higher rates of return for the increased risk.
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- The loanable funds market is a conceptual market where savers (suppliers) and borrowers (demanders) are able to establish a market clearing.
- In economics, the loanable funds market is a conceptual market where savers (suppliers) and borrowers (demanders) are able to establish a market clearing quantity and price (interest rate).
- In the loanable funds market, market clearing is defined as the interest rate/loanable funds quantity where savings equal investment (the amount of capital needed for property, plant, and equipment based investments) .
- The interest rate can also describe the rate of return from supplying or lending loanable funds.
- When the supply and demand for loanable funds are equal, savings is equal to investment and the loanable funds market is in equilibrium at the prevailing interest rate.
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- If the interest-rate sensitive liabilities equal the interest-rate sensitive assets, then fluctuating interest rates do not affect bank profits.
- During the last 20 years, four factors changed how a bank manages its balance sheet.First, the U.S. federal government deregulated the financial markets, granting banks more flexibility in acquiring assets and liabilities.
- Second, financial innovation created new, liquid financial instruments, such as repurchase agreements, federal funds market, and securitization.
- For example, a variable interest rate mortgage is an adjustable-rate mortgage (ARM).
- Finally, the derivatives market expanded during the 1980s.
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- Service marketing management oversees the implementation of marketing programs, while metrics measure their effectiveness and performance.
- Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities.
- Overseeing the successful development and execution of the marketing plan falls under service marketing management roles.
- It is the responsibility of marketing managers--in the marketing department or elsewhere--to ensure that the execution of marketing programs achieves the desired objectives in a cost-efficient manner.
- Some common metrics used to measure performance include lead to conversion rate, click-through rate and number of new opportunities (i.e., new business deals).