Interest Rate College Essays Samples For Students

Following the American Psychological Association’s Guidelines

INTRODUCTION
Monetary policy implemented by the central banks aims at influencing directly the financial markets to create a stable monetary environment in the economies. The economies fluctuate over time with peaks and troughs. The globalization has created a large world economy which includes the connected country economies, and any crisis emerging in a country spreads to the other countries’ economies quickly. The crisis creates vulnerable economies, and the economy managements of the countries have to intervene to recover from the crisis. The global crises have severe results for economies and individuals, and they also can create disequilibrium in the monetary values ...

Inflation targeting and Interest rate targeting are two primary and most popular monetary policies across the globe today. Inflation targeting can be defined as a central bank policy that revolves around meeting and adhering to preset and publicly displayed targets for the annual rate of inflation (investopedia 2013). The benchmark used for inflation targeting varies from country to country but is some form of price index of a variety of consumer goods. Most commonly this benchmark is Consumer Price Index (CPI). While Interest rate targeting as a monetary policy regulates and checks the interest rate charged by one depository institution on an ...

Introduction

Monetary policy refers to those policy measures targeted at achieving desired economic outcomes through money market operations. Authorities in charge of money market control use different policy instruments to control the money supply in order to achieve suitable market prices as well as stability in the national economy. The key instruments at disposal for those authorities include open market operations, minimum reserve ratio as well as bank rate. However, the policy instruments application does not have a direct impact on market prices and demand but follows a transition mechanism from the authorities’ actions to the desired economic results. In that respect, ...

Executive Summary

Bank of England acts as a central bank and performs the credit rationing and is also the controller of the monetary policy, so as to ensure that there is no hindrance to the economic stimulus. It cautiously exercise its credit control function. For Instance, at the time of inflation, when the demand for money is high and so is the rate of consumer spending, Bank of England increases the interest rates and also adopt other measures as Open market operations to limit the money supply. This will impact the total availability of funds in the market and will ultimately lead ...

Introduction to Exchange Rate Determination

Determination of the exchange rate in economics has been one of the major practices in economics that has attracted diverse views. Various theories have been developed to explain the determination of the exchange rate in various schools of thought. The monetary model has been one of the earliest models used in the of the exchange rate determination. However, it provides a good benchmark of comparing other models of interest determination. In addition, the model plays an imperative role in developing insights of capturing long trends. In the monetary model exchange rate are determined through the forces of demand and supply. ...

Introduction

In this report, we will discuss some of the concepts relating to bond valuation and will also compare the interest rate risk and reinvestment along with some of the measures to manage them. We are sure that by the end of this brief report, we will be having a good understanding relating to valuation of fixed income securities and risks associated with them.

Part A

Answer 1)
1.a)
Referring to the calculations in excel spreadsheet, we find that the present value of the bond is $852.73. In addition, since a 6.5% bond is trading at Yield to Maturity of 8%, it ...

Introduction

In 2008, the entire world was rocked by the biggest financial crisis since the Great Depression. The crisis first affected the entire financial system of the United States before then quickly spread globally. The casualties of the crisis included the whole investment banking industry of the US. Other casualties were the US largest insurance company, largest mortgage lender, among other firms in the financial services sector. The US auto industry was severely hit leading to loss of jobs. The US unemployment rate increased by 4.9% points from the third quarter of 2007 to the third quarter of 2009. The ...

Question 1

What is the potential damage of government derivative rules on derivatives users?

Derivative markets are normally subject to derivative regulations by federal governments. The Commodity Future Trading Commission (CFTC) formulates rules that govern futures and options contracts while the Security Exchange Commission formulates rules to control options exchanges. These derivative rules are meant to enhance trustworthiness of the market and improve performance of the market.

However, government derivative rules usually have potential damages on derivative users.

First, complying with derivative rules set by the government involve costs on the side of derivative users. Executing transactions on an organized exchange ...

Essay

The term “interest rate” is one of the most widespread in the present financial sphere. There are several types of this index, and the differences between those are usually based on the fixed set of economic factors.
The nominal interest rate is the percentage growth of funds that creditors take from borrowers for their services (using borrowed money). The nominal interest rate is the basic type of interest rate, and is the stated rate on a given bond or loan. In essence, the nominal interest rate is the actual price that borrowers pay to creditors to use their money. ...

Introduction

The actions taken by the Reserve Bank of Australia to influence the cost and supply of money in the economy are referred to as the monetary policy. The main tools through which the monetary policy influences the market operations is the interest rate that is paid on the loans from the money market. Manipulating the interest rate is the main tool of RBA to influence its monetary policy. RBA is the central bank of Australia; and it is the role of the central bank to ensure price stability by controlling the supply of money. So, a stabilizing role is played ...

Risk exposures: The Financial Transaction Risks Table

Features of the method used to measure the interest rate identified
Before determining the best method to be used in the measurement of the interest risk, it is essential to assess the source of the risk. The most common sources of interest rate risk are security mismatching for various items in the balance sheet depending on whether the interest rate is fixed or variable. The value assets lead to interest rate risk when there are valuation problems as well as in situations where interest rates are not aligned with the liabilities and assets (Kaufman, 1984).
Various methods are applicable ...

The IS LM model or the Hicks –Hansen model is the macroeconomic tool that shows the relationship between the interest rates and the real output of goods and services and the money market. The intersection of the investment - saving curve or the IS curve and liquidity preference curve or the money supply curve is the general equilibrium in both the markets .This model explains the changes in the national income when the price level is fixed in the short run and also shows the reason for the shift in the aggregate demand curve. It was first developed by ...

Problem 1

In a fixed exchange rate regime (also known as pegged exchange rate), official exchange rate is tied to the exchange rate of another country. In some cases, it can be tied to the prices of gold. Free floating exchange rate changes freely and is determined by the demand and supply of that particular currency relative to other currencies. In the managed floating system, central bank at some frequency often intervenes not to allow the exchange rate getting away to some unexpected level.
The fixed exchange rate system keeps currency value within a narrow range, whereas currency value can be volatile ...

Abstract

When an organization has cash inflows and outflows of foreign nature, the cash forecast for every currency will help during the identification of the currency exposures. The format of the estimation should allow the users to determine the balance for every currency and whether there is a growing shortage or extra money over time based on reasonable cash flows. The increasing gaps between the cash inflows and outflows may need hedging, and the cash flows that offset over time represents the issue of timing effectively. The management of foreign exchange transaction can be achieved through the offsetting transactions to ...

Answer 1)

Time Value of Money is an important concept in the world of finance. As per the principle, the value of money received today is more than the same amount of money to be received in some future date. In other words, as per the principle of Time Value of Money, money carries the power to earn interest. Thus, any amount of money is worth more the sooner it is received. For Instance, $100 invested at 10% rate of interest for 1 year will be $110 after the end of year. Similarly, if $100 is received after 1 year, this ...

Question 1

- The formula for bond calculation is as follows
The present value of the bond (price) = c x F x {1-(1+r) ^-t}/r + F/ (1+r) ^t
- C represents the coupon rate of the bond that is the interest rate the bond is offering.
- F is the face value of the bond.
- R is the market interest rate or the benchmark rate.
- T represents the number of times the interest payment is to be made.
- Since the interest is paid semi-annually the bond interest rate per ...

Introduction

In general, markets do not adjust automatically to bring about equilibrium. Thus, historically, many economists, including John Keynes, recommended the need for government intervention. In his book, ‘ The General Theory of Employment, Interest and Money’, Maynard Keynes asserts that the government should intervene actively in order to manage the level of aggregate demand in an economy so as to bring about desired level of employment and output. His argument is attributed to the fact that wages are rigid and, thus, may not fall enough to clear the market and solve the unemployment problem. Broadly, the government can intervene in ...

1.
a) Find the U.S. inflation rates between 2002 and 2007 from the IMF website and calculate the Purchasing Power Parity (PPP) exchange rates for Countries A, B, C and D in the case study. (The inflation rate in each country in the case can be calculated from the Consumer Price Index. For Example: inflation rate for country A=14.7%= 132.9 – 115.9 /115.9
[20 marks]
b) Did Purchasing Power Parity theory hold in these countries? Which currencies are over- or under-valued against the US dollar?
[4 marks]
c) Find the U.S. dollar lending rates (prime rate) between ...

Introduction

The decision on whether to invest money or deposit it in a savings account is influenced by many factors. However, the most significant factor would be the economic gain from depositing money in a savings account compared to investing. Various indicators can be used to determine the economic gain to be made in terms of purchasing power. One vivid indicator is the real interest rate. Real interest rate as an economic indicator describes the rate at which an individual’s purchasing power grows from investing activities. The real interest rate is derived from adjusting the nominal interest rates in ...

Article 1: The case for minimizing risk in your bond holdings by William Bernstein

There is always a trade-off between risk and return. Investors are rational and risk-averse hence, they require additional returns when the risk involved in any investment is high. In this article, William Bernstein explains how investors can reduce the risk in their investments in bonds without necessarily interfering with the expected returns on the bonds. One of the risks affecting bondholders is the interest risk. Changes in interest rates affect the return on bonds. When interest rates rise, bondholders lose since the prices of bonds fall. This is because the bond will be paying a lower coupon interest compared ...

Abstract

The current paper explores the main differences of the Great Recession in 2007-2009 from other economic collapses in the history if the United States. Section I discusses the general features of a recession and describes the main responsibilities of the National Bureau of Economic Research. Section II is devoted to the comparison of the Great Recession with the recession of 1980s. The section is divided into four subsections. Subsection A presents the basic comparison of recessions in the U.S. history and explains the choice of the 1980s period for the further comparison. Subsection B explores differences in unemployment in ...

Investment Analysis of Coca-Cola Co. and PepsiCo Inc

Investment Analysis of Coca-Cola Co. and PepsiCo Inc
1. Company Profiles – A Synopsis

PepsiCo Inc, an American multinational, is a food and beverage organization which has headquarters in New York, United States. The company has interests in the production, marketing and distribution of beverages, snack foods, and other products. This publicly traded company was formed in the year 1965 after Pepsi-Cola Company merged with Frito-Lay, Inc. Coca-Cola Company, also an American multinational, sells carbonated soft drink in every store having a headquarter in Atlanta, Georgia of United States. It was founded in 1886.

Product/Services

PepsiCo has a diverse beverage and food portfolio ...

A bond is a long-term debt instrument used by firms as well as governments to raise additional capital to finance their projects. A bond has a face value which must be repaid to the bondholder at the maturity of the bond. It also involves periodic payments of interest to the holder at a stated coupon rate. Interest on a bond is an annuity paid until the bond matures while the face value is a single payment at the maturity of the bond (Scott and Brigham 241). The value of a bond is therefore given by the following formula:

Where

B0 = current value of the bond (at ...

Complexities of U.S. Financial System
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U.S. Financial System
U.S. Financial System is made up of numerous different markets for diverse products offered on a various trading platforms and exchanges. Among the many products traded are stocks or equities, fixed income securities, foreign exchange, commodities, derivatives etc. Financial market helps to keep the wheels of the economy moving by allowing individuals and businesses either to invest their excess funds in different products or to sell their products to raise cash when they want to. That is the market offers liquidity- the ease of buying and ...

introduction
Time value of money is an important concept of finance and financial management. It has been said that the present consumption reveals more value than a future consumption and it is because of the fact that consumers have two options; either to consume it right away or forego it to avail it in future by investing the present amount (Houston, and Brigham, 2009).
This report defines and highlights the importance of time value of money and also discusses the importance of time value of money for the financial managers. The report also calculates present value of money ...

Japanese Economy in the Recent Years

Introduction
During the advent of economic downturns particularly in terms of financial crises or bubbles, the usual resort of the government is to rely primarily on its monetary tools alongside expansionary fiscal policies to stimulate the economy.
Monetary policies are tools used to deal with inflation, budget deficits, unemployment, incomes, international economic relationships among others. Monetary policies have profound effects on our jobs, incomes, livelihood, and career choices.
One of the considerations and is always on the watch in an economy is the behavior of prices of the goods and services. As the law of demand states that with ...

Introduction

The effectiveness of the field of statistics is increasing day by day, as it has the tendency and ability to articulate the things in an effective manner. Statisticians used the power of this field to predict and anticipate the future in an organized manner (Montgomery, Peck & Vining, 2007). This field has number of techniques and models from which relationship among two variables can be analyzed along with predicting the future capabilities accordingly. The tools and techniques used in the field of statistics, used specifically for modeling and forecasting. The analysis initiated through the statistical measures usually has a dependent variable ...

ABSTRACT 3

INTRODUCTION
Background 4
Information Sources 4
Limitations 4
ANALYSIS
Presidential Election and the Economy 5
CONCLUSION
Summary and Interpretation of Findings 12

REFERENCES 13

Abstract
This paper presents an analysis of the article entitled The Growth Recession of 2012 and the Presidential Election published by Forbes.com in October 2012. The purpose of the paper is to present a recently published article and provide an analysis in light of the principles and theories of economics.
The discussion involves the analysis of a recent article by relating it to the theories and principles of Economics specifically ...

I am interested in writing about economic growth. This topic is so timely because the economy of US was reported to grow in the third quarter of this year. The growth in the economy was due to increases in inventories and export, thereby raising the gross domestic product to 2.7% during the third quarter.
Economic growth is a very important indicator of the economy as it signifies increase in the productive capacity of the country over time that leads to increases in national output and income. It is the increase in the total output of a country over time and ...

The most recent event in the country that I can think of is the 2012 Presidential Election. What has this to do with the economy?

The most obvious connection between a presidential election and economic activity is that, if the incumbent government is eyeing for a reelection, then pre-election programs include execution of expansionary fiscal policy since such policy (either increase in spending or a tax cut) tend to increase economic growth, reduces unemployment and increases the political support for the politician.
I learned that fiscal policy pertains to discretionary changes in government spending and tax collection with the goal of ...

Long-Term Financing

Question 1
Describe the major advantages and disadvantages of going public.
Going public refers to the process by which a private company floats its shares to the public and became a public company. Small companies seeking to expand and grow their company usually go public to generate the much needed capital for expansion. There several advantages and disadvantages of going public.
The first advantage is that it is a cheaper source of finance. Stock market provide small companies with debt a cheaper source of funds because there is no repayment of capital and the dividend payment on share is not ...

Response

Response
5. Explain the effectiveness of monetary policy.
Monetary policy is an item that is used by the state or author in an attempt to control instances of inflation and ensure that there is price stability. The central bank has the mandate to monitor the growth and the size of the money supplied. Various strategies are used to control and maintain the monetary policy. For example, selling or buying the government bonds, adjusting interest rates and managing the bank reserves (Galí & Gertler, 2009).
Monetary policy is effective. This is based on the expansionary policy. If an increase in the ...

The Influence of the Repeal of the British Usury Laws

Introduction
The recent few years have experienced a dramatically high growth in the interest rates globally, which is also believed to have reach a historically high rate. This growth, with specific reference to the existing interest law, has resulted in serious concerns related to the development of credit markets.
The reasons behind the efforts on developing credit markets is essentially due to the reason that in quite a few jurisdictions, the restrictions on usury or the interest have normally stayed at the lower level of interest rates that were formerly established. The ultimate outcome of this is that debtors ...

International Finance Management

Reference list .
Introduction
Increasing participation in international trade exposes companies to the exchange rate risk. That owes to the possible loss of value in the amounts that are to be received for exports or the increase in the amount that has to e paid for imports. In that respect, companies need to apply strategies to manage the risk through various available techniques. In that view, this report presents a demonstration of those techniques’ application with reference to a company involved in payments and receipts of foreign currency. The report presents an analysis of the forward, swap arrangements and futures ...

Abstract

This paper is on the topic of currency hedging as part of Global Financing and Exchange Rate Mechanisms. The first section of this paper will discuss the use of Currency Hedging in global financial operations. The following section of this paper will describe the importance of currency hedging in management of risks. The final section of this paper will conclude with the basic understandings of currency hedging and its understandings.

Introduction

Currency hedging is done by entering in a financial contract for protecting expected, unexpected or anticipated change in the currency rates. Businesses and financial investors use Currency Hedging for eliminating ...

Answer 6(Spot rate and Forward Rate)

The spot rate is defined as the current exchange rate. On the other hand, a forward rate is the rate that is agreed by both the buyers and the sellers to be applied in the future in forward transactions. Currency movements do not affect the forward rate. The main relationship between the forward rate and the spot rate lies in the calculation of the rate. The forward rate is calculated by either adding or subtracting a premium or discount from the spot rate. The premium or discount arises as a result of the discrepancies between the interest rates of the two prime ...

1. Current U.S. Unemployment and Low Wage Rate

Thesis Statement

In the economy of the United States, the rise in wage rate is less, but unemployment is becoming high in the labor force.

Explanation in the light of Economic Concepts and Theories

Considering the article Yellen Sees Muted Inflation as Unemployment Curbs Wages from Bloomberg Businessweek, written by Jeff Kearns, The long term unemployment is constantly dominating the economy of the United States, due to which the people are facing difficulties in order to enter the job market, and this rise in unemployment is exerting downward pressure on the wages. People have to work on the lower wages due to ...

[Author’s Name]
[Institution’s Name]
The prevalence of interest rates could e extremely important for a county from different standpoints and it is more than important for the countries to have a specific amount and trend of interest rate prevalence in total. There are number questions which have been asked in this particular report in total.

Chapter-2: Fed Watching

- Fed Monetary Policy Change
In the United States of America (USA), Fed held responsible for changing and maintaining the prevailing interest rate in a country. The question regarding changing the monetary policy of the country reveals that there are certain things ...

Foreign exchange risk, which is also referred to as currency risk or exchange risk, is a risk that arises from being exposed to unanticipated fluctuations in the exchange rate of currencies of two different countries. Multinational businesses and cross-border investors are often faced with exchange risk when engaging in transactions that involve cross-currency payments at a later date. There various ways of managing exchange risk to minimize financial losses. This paper analyses the various options the business to ensure it is in the best position financially as well as reduce risk exposure.
The first option would be to wait until ...

Federal Reserve Paper

Introduction
Throughout the 19th century and the start of the 20th century, monetary alarms overwhelmed the nation, dominant to bank deficiency and company downfall that rigorously agitated the economy. The downfall of the nation’s banking structure to adequately supply funding to anxious depository organizations provided considerably to the economy’s susceptibility to monetary alarms. Short range credit is a significant basis of liquidity when a bank senses unanticipated and extensive withdrawals throughout a monetary alarm. A chiefly severe crisis in 1907 provoked Congress to set up the National Monetary Commission, which put onward recommendation to generate a foundation that would help ...

1. The Financial Crisis: Avoidable but Inevitable
Theoretically, the financial crisis could have been avoided as investigation findings revealed . Under the circumstances however, the crisis was an inevitable consequence of everything that was going.
The Federal inquiry concluded that the 2008 financial crisis could have been avoided. The crisis was the result of “widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street”. It was the result of “greed, ineptitude or both” on the part of government and the private sector.
Among the persons found responsible for the crisis included Federal Reserve Chairman Alan Greenspan and, ...

Most of the services offered by a bank are largely financial in nature. However, the terms Assets and Liabilities have a different meaning when it comes to banks. For instance, assets in banking terminology would indicate fund usage, while liabilities in case of banks would, in fact, be a source of funds for banks. This essay will consider five different services or function that a bank offers and would explain with reasons if the said service is an asset or a liability, while also evaluating the services and providing an overall impression of the same.
This essay considers the ...

There are two kinds of bonds including those issued by government and the bonds issued by corporations. Corporate bonds are considered one of the major forms of investment vehicles where people save their money in order to plan for their retirement. Corporations issue bond so that they can raise capital; the investor is paid an interest on the invested amount by the corporation (Asquith & Au et al., 2013). There are many factors that affect the interest rate of a bond: the first factor is the level of risk involved; investor lends the money to the corporation and receives interest based ...

2.1. There are two types of risks, known as systematic risk and unsystematic risk. Systematic risk is the one that cannot be mitigated with the help of diversification and strategies; however unsystematic risk is the one that can be mitigated with the help of effective strategies. In terms of quantification, there are three different aspects that are integral known as market risk, credit risk and operational risk. In this particular assignment, all of the analysis will be based on the market risk and its exposure. It has been originated through the Forward and Future Contracts (Christoffersen and Mazzotta, 2004).
...

Chapter 10:

Question1.
As government expenditure increases, the income increases. This increase in income leads to a rise in consumption expenditure. A 1 unit rise in income leads to a rise in consumption by the marginal propensity to consume. As consumption expenditure increases, this induces further increase in output in the economy. So income increases. The increase in government expenditure creates a multiplier effect. This multiplier depends on the marginal propensity to consume (MPC). Higher the MPC higher is the multiplier effect.

The money market is at equilibrium when the demand for money equals the supply of money. The demand for money has ...

Introduction

Economic performance varies between countries owing to various factors. Such factors include resources endowment, level of development, education as well as economic policies. In that view, those factors results to differences in macroeconomics factors that act as the performance measures and indicators. Thus, comparing macroeconomic performance between countries offers a view of the country with better growth and opportunities. To demonstrate the differences, this analysis compares macroeconomic performance of Scotland and England by analyzing their macroeconomic variables over the period beginning the year 2009 to 2013. The analysis is done with two approaches; level comparison and trend analysis.

Analysis

The crucial ...

Essay: Global Financing Strategy

1 If Germany imposes interest rate ceilings on German bank deposits, what is the likely effect of this regulation on the euro interest rate?

While Germany does not have any statutory laws governing the ceilings on interest rates, the morality of a credit contract is required to be analyzed by a court, as per the Federal Court of Justice. The contract is said to be excessive when the interest being charged amounts to twice the average market interest rate for a specified duration .

Germany uses subjective controls to limit extortionate credit practices. However, should it choose to impose an interest ceiling on ...

Task

Compare the corporate form of organization with the sole proprietorship and the partnership.

Describe the principles dealing with ways of creating value and economic efficiency

The major principles include comparative advantage and absolute advantage. Comparative advantage is the ability of a country to produce a particular commodity in a more efficient way than other countries. Countries that have modern machinery are likely to produce machine intensive products than other countries.
Absolute advantage is the ability of a county to be able to produce a particular commodity that other countries do not produce. For instance, a country that is endowed with a unique mineral that is not produced by other countries can be said to have absolute advantage ...

References 6

The Relationship between Interest Rates and Exchange Rates in Australia
1.0 Introduction
In macroeconomics, large scale market-wide factors are considered. Commonly, macroeconomic factors are considered in order to support decision-making, particularly for firms seeking to perform international business (Goodwin, Nelson, Harris, Torras & Roach, 2013). Two of the most important rates influencing decisions of international finance are the interest rate and the exchange rate (Terra, 2015). The interest rate is the percent cost to rent money, and the exchange rate is the value of one form of currency against another. Firms examining options with regard to how to invest money ...

Ben Bernanke, the chairman of the US Federal Reserve from 2006 to 2014 stated in the year 2015 on October 4  that for the first time the federal reserve has taken the decision to raise from 'zero interest rate' and the decision was taken after the great depression. When the markets crashed in the year 2008 then the monetary policy of the federal reserve saved the economy to recover from the recession. However there are other criticisms that the 'zero interest rate' policy of the federal reserve was the reason of the Great Depression of 2008. But Bernanke argued ...

The financial crisis post 2008 forced regulators to consider unconventional steps in monetary policy. At first, the US Fed used various tools in its economic arsenal to set the country on a fast growth path and to prop up the inflation numbers that would indicate an enhanced demand of goods and commodities. When everything failed, the US Fed and the Government decided to go ahead with a plan called Quantitative Easing. The plan simply consisted of buying bonds and other government securities by printing money which would introduce money into the system, keeping some other factors constant. This method ...

Risk is defined as uncertainty in broad terms. This uncertainty can be due to a large number of factors, which depend on the type of risk. Some of the common factors which result in this uncertainty can be changes in input parameters, miscalculation of parameters etc. (Kuritzkes, Schuermann, & Weiner, 2002).
Risk can result in large and unexpected losses and can really hurt the profitability of companies. However, risk is not always bad and little bit of risk can lead to better financial results. However, the relationship between risk and better results is a lot more complex and depends on ...

Introduction

Inevitably, the topic of economics is the most astounding and effective one for the economies, as the main crux of an economy and economic factors are always be effective for their future growth and effectiveness. Economics is a core subject that associated with almost every walk of life, and it can be used for different purpose all over the world. Economics is a subject that specifically associated with the earning and consuming the money accordingly and effectively at the same time. The two broad types of economics, on which the entire broad definition and outlook would be depending, are effective for ...

Part A: Future values of cash flows at the end of the seventh year at different rates

Section a: 6% interest rate
The first rate that has been used is 6%. In the first year, the amount is $ 15,000. Since these amounts are received at the end of each year, the interest is gained during the following year. The formula for future value is; FV = A (1+r) ^ n. In this formula, FV is the future of the annuity; A is the annuity itself while r is the interest rate. On the other hand, n represents the time. In the first instance the future value for $ 15,000 in the entire period will be $ ...

In a monetary union, governments of member countries do not have their control on the currency in which they issue debt; the case is different for a non-member country, because, they are capable of issuing debt in their own currency on which the government has full control. In the article, Paul De Grauwe, has evaluated the economic position of a member (Spain) and non-member (UK) of euro-zone. The state of banking sector of UK is not much healthier than Spain, UK government has their control over their own currency on which they issue debt, whereas Spain is a member of euro-zone, and has ...

The economic meltdown in the US was, as a result, of the housing bubble burst that brought about a massive economic recession in the US. The film, Inside the Melt Down, depicts a series of large American corporations going bankrupt and their shares dropping down drastically due to the economic recession. For example, Bear Stearns is a one of the multinational investment company that took an economic downturn in that its shares dropped from $171 to only $57 in a single day. Given that the media aired out their concerns regarding the economic drift of the corporation, most investors withdrew from Bear Stearns. Despite ...

Money crisis in UK can be controlled by the Bank of England through changing the interest rate while attempting to alter the level of economic activity. Actions can be taken when the money in circulation increases in fast rate as compared to the output volume produced. This situation can be referred to as inflation. To control this situation, interest rates should be changed. The Bank of England uses monetary policy to increase or decrease the money in the banking system. However, the Bank of England does not print more money to alter money supply as this is against the ...

Most important factors in interest rate decision reached by Fred.

Fred has to take in to consideration the economic performance of the economy. Interest rate has been touted as the key determinant in the rate borrowing in any economy. People will opt to go for borrowings when the interest rate is low. On contrary, when the interest rate is high, many people are discouraged to borrow due to the high costs involved in furnishing the capital.
Interest rate should also put some consideration on the type of business the borrower engages in.Taking in to consideration risky businesses, it becomes a tricky situation since return in uncertain, Hence in this ...

Following the American Psychological Association’s Guidelines

Recessions and Recovery Strategies
Economies are alive organizations which sometimes gets problems similar to our bodies. As we grow up and develop, we catch some sicknesses and similar to us, economies also grows up and sometimes they face some crisis and recessions. During recessions, consumption level and income level of people decreases and economy slows down. In a slow economy, investors do not prefer to make new investments and even during a severe recession, they might stop their all investments in the economy. As we know, economies have a cycle and when it slows down all parts in the economy slows ...

The European System of Central Bank (ESCB) is governed by European Central Bank (ECB) and the National Central Banks (NCB) of European Union Member States. European Central Bank is the Central Bank of Europe Zone. ESCB is governed by the governing council and other decision making bodies of ECB. The governing Council is responsible for making monetary decisions and the Executive Board is empowered to implement monetary policy as per the framework of decisions laid by the Governing Council. Just like any other Central Bank, the core function of ECB includes maintain price stability of the local currency in ...