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Quantitative Easing - Decreasing Interest Rates...Quantitative Easing / Decreasing **Interest** **Rates**
Introduction
Quantitative easing is referred to an unconventional monetary policy practiced by central **banks** to enhance the growth **rate** of an economy when conventional monetary policies fail to stabilize and stimulate the economy. As Bonner, Wiggin, and Incontrera (2009) point out, through quantitative easing, a central **bank** generally purchases different types of financial assets to pump a fixed volume of money into the economy with intent to promote economic activities and thereby to boost growth **rate** (p. 272). This practice is entirely different from the usual approach of purchasing and selling government bonds to maintain a targeted market **interest** **rate**. It must be emphasized... that a...

6 Pages(1500 words)Research Paper

Assets and Interest Rates...10.01 US Treasury Yield 4.74 4.71 4.68 4.63 4.6 4.59 4.56 1. Discuss which **interest** **rates** should be used for an asset which is 1 year in length, 5 years in length, 15 years in length and 30 years in length. The **interest** **rate** will depend on the credit **rating** of the corporation that is issuing the asset. The higher the credit **rating**, the lower will be the spread between the US treasury yield and the **interest** **rate** of the corporate bond. Here we will assume that the credit **rating** of the company is AAA. So for a one year bond the **rate** will be US treasury yield plus 14 basis...

3 Pages(750 words)Coursework

Interest Rates Essay...for the decrease in value of the money due to inflation, for example a dozen eggs might cost 100rs today and after a year they might cost 110rs, so if I have loaned any one 100rs I will want 110rs back because that is what 100rs is NOW worth or that is the equivalent value. There are basically two theories that explain how **interest** **rates** are decided upon, one is the 'Loanable Funds Theory' also known as the classical theory and the other one is 'Keynesian Theory' also known as the liquidity preference theory. The loanable funds theory is the older one of the two theories and according to this theory the **interest** **rates** are determined by the demand for loanable funds by...

2 Pages(500 words)Essay

Factors affecting mortgage interest rates...on the debt instrument and consequentially the mortgage **interest** **rates** increases since there will be high demand for funds for property purchasing Treasury bonds are long term debt instrument issued by the government to the public. They are issued to a period of 30 years with **interest** being paid quarterly to the bondholder. If the **interest** **rate** is low the public will be mean to invest on them and hence mortgage **interest** **rate** due to the fact that demand for money to finance mortgage is low.
Factors arising from Federal Reserve board.
Federal reserve board is a government run board to oversee the...

7 Pages(1750 words)Essay

Interest Rates...instead of loan able funds. Capital resources are scarce; they have to be distributed among competing demands ultimately based upon consumers' choices for different assortments of goods. **Interest** thus reflects the degree of scarcity in which capital stands in relation to other factors of production, when contributing to the consumers' competing demands for various assortments of goods and services.
**Rate** of **Interest** Causing Credit Crunch in Economy:
The ultimate objective of an economic system is to increase the welfare of its population. **Interest** **rates** provide the vital support to national economic policies in achieving this goal. Before the...

8 Pages(2000 words)Essay

Interest rates & stocks...Running Heading: **Interest** **rates** & stocks **Interest** **rates** & stocks To calculate the return of XYZ stock, Capital Assets Pricing Model (CAPM) is used. The CAPM equation is as follows:
Ks = Krf + (Kp* β)
According to Bloomberg, the risk free **rate** or U.S. 10-year Treasury bond **rate** is 2.125% which is denoted by ‘Krf’ in the above equation. Kp is the market risk premium which is equal to 7.5% and β is the Beta of XYZ stock which is equal to 1.64. By using these values in the CAPM equation, the return of XYZ stock has been calculated and it is equal to 14.425%.
To calculate the price of the stock, Constant Growth Model (CGM) equation has been...

2 Pages(500 words)Essay

Term structure of interest rates...consistent with rational expectations and maximizing behaviour (Cox, Ingersoll, and Ross, 386)
Works Cited
Benninga, Simon. & Wiener, Zvi. “Term structure of **Interest** **Rates**”. Mathematica in Education and Research, Vol. 7 No. 2 (1998). Print
Culberston, J. M., “The Term Structure of **Interest** **Rates**,” Quarterly Journal of Economics, 71 (1957), 485-517.Print
Fisher, Mark. “Forces that Shape the Yield Curve”. Federal Reserve **Bank** of Atlanta Economic Review 86, (2001a) 1:1–15.Print
Hicks, J. R. “Value and Capital”, 2nd Edition. London: Oxford University Press, (2006).
John C. Cox, Jonathan E. Ingersoll, and Stephen Ross. “The Theory of the Term Structure of...

7 Pages(1750 words)Research Paper

Discussion: Interest Rates...DISCUSSION: **INTEREST** **RATES** Lecturer: DISCUSSION: **INTEREST** **RATES** Inflation, economic output and savings are three macroeconomic factors that influence **interest** **rate** directly. As inflation goes up, **banks** and other financial institutions raise **interest** **rate** to serve as a hedge against depreciation of the quantitative value of money (Brigham & Houston, 2013). Higher economic output and savings are however associated with lower **interest** **rates** because they indicate the robustness of the economy, which gives an indication that the quantitative value of money...

1 Pages(250 words)Assignment

The Structure of Interest Rates and Real Interest Rates...Money and **Banking** al Affiliation Reasons why the **interest** **rates** on the Credit card is higher than that on the automobile loan
There are various reasons credits for higher **interest** **rates** on credit cards as compared to the automobile loans. The fact is that, credit cards are often unsecured. Failure to comply with the credit card’s loan does not accord the **bank** with the rights of repossessing them (Guttentag & Cagan, 1969). So, the loan made by the issuer of credit card is accompanied with greater risk as compared to the secured loan. This hence tends to heighten the **interest** **rates** level to a greater...

2 Pages(500 words)Coursework

Bonds and Interest Rates...Bonds and **Interest** **Rates** Relationship between Bonds and **interest** **rates** A bond is a debt instrument issued by companies or government bodies to borrow money for a fixed period of time. The **interest** **rate**, called the coupon **rate** is generally fixed close to the prevailing **interest** **rates**. Some bonds may offer variable coupon **rates**. Bonds issued by government bodies and financially strong companies would have lower coupon **rates** than weaker or lesser known companies.
Bond price and **interest** **rates** have an inverse...

2 Pages(500 words)Essay