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Understanding Base Rates of Interest and Value of Money - Research Proposal Example

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The paper "Understanding Base Rates of Interest and Value of Money" highlights that pound of tomorrow will be worth less pound of today. This phenomenon helps understand many financial investment concepts to decide about the most beneficial and rewarding investment. …
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Understanding Base Rates of Interest and Value of Money
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Download file to see previous pages Banks and institutions talk about the words such as an annuity, mortgage, present value, credit report, bond, stock and hosts of many words of the financial world and you surely know that it is all about money.
In order to understand these words completely, you need to grasp these terminologies in its true sense so that you become capable of taking a decision on your own. In the next few pages, you will sail through the journey of the most fascinating financial world, which when understood fully may help you immensely.
Everyone has heard this word and knows about it. It simply means that money fetches money. The rate at which it fetches is known as interest. The rate is measured in percentage. Surely, higher the rate, larger the benefit flows to you.
Let us understand the difference between actual and nominal interest rate. Supposing your credit card company charges you interest of 2.5% per month. That means that nominal interest per year is 30 per cent; however, the effective interest rate is something else and can be calculated as,
The biggest hurdle that haunts most of the people in life when they start investment is its smallness. Every big thing initially starts small. The time, energy, and efforts put at the beginning do not seem to justify small returns that any business or investment may offer. People get first thought in the mind "For such a small return should I devote my time and spare the money, which otherwise can better be utilized to get more enjoyment in life." Quick answer surfaces, "Sacrifices are manifold compared to the benefits." The thought of this kind wins over the future benefits that may accrue after a few years. Thus, the person tends to postpone a small but a significant beginning, which is capable of transforming his or her fortune.
This issue has to be understood thoroughly before it really happens with you stopping your small beginning for big gains in the future. ...Download file to see next pagesRead More
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