A comprehensive guide to Certificates of Deposit (CDs), a secure investment option issued by banks, with detailed information on types, terms, interest rates, and benefits.
A Conforming Loan is a residential mortgage loan eligible for purchase by FNMA or FHLMC, offering lower interest rates and more favorable terms than nonconforming loans, with dollar limits adjusted annually.
An in-depth look at the cost of funds, which represents the interest cost a financial institution must pay for the use of money. Analyzing its implications in the banking and savings and loan industries.
Countercyclical policy refers to government economic policies designed to dampen the effects of business cycles, like the actions taken by the Federal Reserve Board in the early 1980s to combat inflation by raising interest rates.
Credit rationing involves the allocation of loans to creditworthy borrowers by methods other than purely market-driven mechanisms, often caused by keeping interest rates below the market equilibrium, resulting in an excess demand for loans.
Crowding out refers to heavy federal borrowing at a time when businesses and consumers also want to borrow money, leading to higher interest rates and reduced private sector borrowing.
Deficit financing involves borrowing by a government agency to cover a revenue shortfall. It can stimulate the economy temporarily but may lead to higher interest rates and other economic implications.
Comprehensive overview of discount points, their purpose, and impact on loans including types, historical context, examples, and applicability in various scenarios.
Disintermediation refers to the process where savings are moved from traditional financial intermediaries such as banks to money market instruments like U.S. Treasury bills and notes.
An in-depth explanation of Federal Funds and the Federal Funds Rate, including definitions, mechanisms, examples, historical context, and related terms.
Understanding the Federal Funds Rate: an essential interest rate in the banking system, set daily by the market, crucial for meeting reserve requirements.
An overview of the Federal Reserve Open Market Committee (FOMC), its role, structure, operations, and significance in formulating U.S. monetary policy.
A comprehensive overview of financial futures contracts, their characteristics, types, examples, and their relationship with interest rates.
The Fisher Effect explains the relationship between nominal interest rates and expected inflation rates, suggesting that interest rates adjust to reflect anticipated inflation.
An in-depth look into fixed income, its types, benefits, risks, and applications.
A comprehensive overview of fixed-income investments, including government, corporate, and municipal bonds, and preferred stock, focusing on their fixed rate of return.
Fluctuation refers to the change in prices or interest rates, either upward or downward, that can apply to the prices of stocks, bonds, commodities, or economic conditions.
An economic equilibrium that exhibits an equality of expected real interest rates among countries when there are no restrictions on international trade, credit, and currency exchanges.
The point in time at which half the principal of a mortgage-backed security has been repaid, accounting for amortization and retirements. The half-life typically assumed is 12 years, but it varies based on interest rate trends and specifics of the mortgage pool.
An estimate of the number of dwelling units on which construction has begun during a stated period.
The Interbank Rate, commonly referred to as LIBOR (London Interbank Offered Rate), is the rate at which banks lend to one another in the international interbank market.
An in-depth exploration of the Inverted Yield Curve, its implications, historical significance, and related concepts in finance and economics.
Laddering is an investment strategy involving the purchase of bonds that mature at different intervals, providing regular income and mitigating interest rate risk.
A comprehensive explanation of LIBOR, including its definition, calculation, historical context, and significance in the global financial system.
An examination of the Liquidity Preference concept in Keynesian Economics, detailing why investors prefer holding liquid money over bonds or other investments, its impact on economic activity, and its relation to interest rates and ROI.
An in-depth explanation of the nominal loan rate, its significance, and how it compares to other interest rate types.
Explore the concept of nominal yield, its calculation, types, historical context, real-world examples, comparisons with real interest rate, and FAQs.
Open-market rates are interest rates on various debt instruments bought and sold in the open market, directly responsive to supply and demand, and distinct from rates set by central banking authorities.
'Per Annum' is a Latin phrase meaning 'once each year' or 'annually.' It is commonly used in financial contexts to describe interest rates, growth rates, and other annual measures.
A perpetuity is a financial instrument that pays a never-ending series of periodic payments. It is commonly used in the contexts of finance, economics, and legal frameworks such as the rule against perpetuities.
Comprehensive coverage of the concept of Positive Carry in financial contexts, including definitions, examples, implications, and related terms.
The Positive Yield Curve describes a common scenario where long-term debt securities have higher interest rates compared to short-term debt securities of the same quality.
Comprehensive explanation of Rate Caps and their role in Adjustable-Rate Mortgages. Detailed insights into different types of rate caps, historical context, applicability, and related terms.
Refinance refers to the process of replacing an existing debt obligation with a new one, typically with different terms. This often involves selling a new bond issue to provide funds for redemption of a maturing issue, or placing a new mortgage on a house that retires an old mortgage. Refinancing is generally used to raise cash, reduce interest rates, or both.
This entry covers the concept of the reinvestment rate - the rate of return from reinvesting the interest earned from bonds or other investments. It details how reinvestment rates differ between zero coupon funds and regular interest-paying bonds.
A Revolving Charge Account is a credit account that allows for continuous borrowing up to a credit limit, without requiring the balance to be paid in full each month.
An analysis of the term 'rich' in financial contexts, including its application to securities, interest rates, and its broader meaning as a synonym for wealth.
A detailed explanation of Rollover Loans, a type of mortgage loan commonly used in Canada, that blends long-term amortization with short-term adjustable interest rates.
An in-depth exploration of the term 'squeeze', including tight money periods, cost challenges, and related financial phenomena.
A comprehensive overview of Term Certificates, also known as Certificates of Deposit (CDs), focusing on those with a long maturity date ranging from one to ten years.
An in-depth analysis of Usury, its implications, historical context, regulations, and contemporary relevance.
A comprehensive understanding of variable interest rates, their types, applications, historical context, and comparisons to fixed rates.
A comprehensive explanation of the Yield Curve, which illustrates the relationship between interest rates and the maturities of bonds. It includes types, special considerations, examples, historical context, and its applicability in finance.
A comprehensive guide to the 11th District Cost of Funds Index (COFI), including its definition, calculation, historical context, applicability, and impact on financial markets in Arizona, California, and Nevada.
A detailed guide on 2-1 buydown loans, explaining how they operate, their benefits, and considerations for borrowers.
A comprehensive guide to understanding the 2/28 adjustable-rate mortgage (ARM), covering its structure, benefits, drawbacks, and practical applications in real estate finance.
A comprehensive guide to understanding a 3-2-1 buydown mortgage, including its meaning, benefits, drawbacks, examples, and frequently asked questions.
Comprehensive overview of the Annual Percentage Rate (APR), exploring its significance, calculation, components, examples, and differences from other interest rates.
A detailed explanation of the Applicable Federal Rate (AFR), its significance in private loans, its calculation, and how it impacts financial transactions and tax implications.
Explore the concept of Annual Percentage Yield (APY), its significance, how it's calculated, and its applications in the fields of finance and banking.
A comprehensive guide on Basis Points (BPS), their use in interest rates, investments, and other financial metrics. Learn the significance, calculation, and application in the finance world.
A comprehensive examination of bond convexity, its relationship to bond prices and yields, and its significance in measuring interest rate sensitivity.
Explore the theoretical condition of Covered Interest Rate Parity, where the relationship between interest rates and the spot and forward currency values of two countries are in equilibrium. Learn about its calculation methods, special considerations, and illustrated examples.
An in-depth exploration of deferred interest loans, including their definition, how they work, practical examples, and implications for borrowers.
An in-depth comparison of Dove and Hawk economic policy advisors, exploring their differing strategies on interest rates, monetary policy, and economic expansion.
A detailed exploration of the Earnings Credit Rate (ECR), its calculation, significance, and application in the banking sector.
Explore the Effective Annual Interest Rate (EAR) with a detailed definition, essential formulas, calculation methods, real-world examples, historical context, and practical applications.
Explore the comprehensive guide to Effective Duration, including its definition, calculation method, practical examples, and applications in the context of bonds with embedded options.
Expectations Theory attempts to forecast future short-term interest rates based on current long-term interest rates, positing that the yield from consecutive short-term investments is equivalent to that from a single long-term investment over the same period.
An in-depth analysis of Expectations Theory, a financial concept used to forecast future short-term interest rates based on current long-term interest rates.
An in-depth look at the Federal Funds Rate, including its definition, how it is determined, and its importance in the financial system.
An in-depth exploration of the Federal Open Market Committee (FOMC), its structure, roles, and the critical impact it has on the direction of the United States monetary policy.
An in-depth analysis of the flat yield curve, its characteristics, implications for investors, and its position within the economic landscape.
A comprehensive overview of floating interest rates, including their definition, how they function, and practical examples.
A Floating-Rate Note (FRN) is a type of bond with a variable interest rate that adjusts periodically. Learn about how FRNs work, their benefits, and their place in investment portfolios.
An in-depth exploration of Foreign Currency Swaps, including their definition, how they work, their various types, historical context, and relevance in the financial market.
An in-depth exploration of Forward Rates, their definition, calculation methods, and applications in financial transactions. Understand the importance of forward rates in finance, their historical context, and how they are derived from spot rates adjusted for the cost of carry.
A detailed examination of the 1982 U.S. law aimed at easing interest rate pressures on banks and savings and loan institutions, exploring its history, implications, and lasting impact on the financial sector.
A comprehensive guide to understanding gross interest, including its definition, calculation methods, implications, historical context, and related terms.
A detailed exploration of Guaranteed Investment Contracts (GICs), explaining their structure, benefits, uses, and historical context, with examples and FAQs.
A comprehensive guide on the Heath-Jarrow-Morton (HJM) Model, detailing its application in modeling forward interest rates and valuing interest-rate-sensitive securities, alongside historical context, examples, and unique considerations.
An in-depth look at the Hong Kong Interbank Offered Rate (HIBOR), explaining its purposes, functionality, criticisms, and its role in the financial markets.
A comprehensive guide to the humped yield curve, explaining its definition, functioning, different types, and implications in financial markets.
Understand what an implied rate is, how it's calculated using spot and forward rates, and explore practical examples alongside relevant formulas.
A comprehensive guide to understanding indexed annuities, including their definition, workings, potential yields, and associated caps.
A comprehensive exploration of inflation hawks and the implications of dovish and hawkish monetary policies for economic stability and interest rates.
A comprehensive guide to understanding the interbank rate, its workings, and real-world examples.
Comprehensive exploration of Interest Rate Differential (IRD), including its definition, different types, examples, historical context, applicability in finance, and related terms.
A detailed exploration of interest rate options, their functions, and practical applications in hedging and speculation in financial markets.
A comprehensive guide to understanding interest rates, including their various types, how they affect borrowers, and their broader financial impacts.
An in-depth exploration of the International Fisher Effect (IFE), including its definition, practical examples, and mathematical formula, to understand the relationship between interest rates and exchange rates.
An in-depth exploration of the IS-LM Model, detailing the IS and LM curves, their characteristics, and limitations, as well as historical context and applications in macroeconomic analysis.
An in-depth exploration of the Jarrow Turnbull Model, a reduced-form credit risk pricing method that uses dynamic interest rate analysis to determine default probability.
An in-depth exploration of the Johannesburg Interbank Average Rate (JIBAR), its role in South Africa's money market, and its various discount terms.
Explore the contributions of John B. Taylor, the renowned economics professor known for formulating the Taylor Rule, a pivotal guideline for central banks in setting interest rates.
An in-depth exploration of the key rate, covering its definition, various types, significance in the financial world, and practical applications.
An in-depth exploration of the legal rate of interest, including its definition, types, historical context, special considerations, and practical applications.
A comprehensive guide to understanding the LIBOR Curve, its function, and the criticisms it has faced.
Comprehensive exploration of Liquidity Preference Theory, its historical context, illustrative examples, and underlying mechanisms.
A comprehensive exploration of liquidity traps, covering their definition, underlying causes, historical instances, and economic implications.
A comprehensive guide on loans, including definitions, mechanisms, different types, and practical tips on obtaining a loan.
Explore the London Interbank Bid Rate (Libid), its definition, how it functions in the interbank market, and its significance in finance.
Explore the nuanced definition of long-term debt, its relevance in financial accounting, how it impacts businesses, and the sensitivity to interest rate changes.
Understanding the low interest rate environment, its definition, examples, and wider impacts on the economy, investments, and financial markets.
Comprehensive guide to Market Segmentation Theory, exploring its definition, how it works, types, examples, historical context, and application in finance.
A comprehensive guide on the Modified Duration formula, including its calculation, significance, examples, and practical uses in finance and investments.
In-depth exploration of Money Market Accounts, their functionality, interest rates, benefits, and key differences from other types of bank accounts.
An in-depth exploration of money market yield, including its definition, calculation methods, practical examples, and its role in financial markets.
Understand the concept of Mortgage Rate Lock Float Down, its benefits, and real-world examples highlighting its importance in securing favorable mortgage rates.
A comprehensive overview of the Mumbai Interbank Offer Rate (MIBOR), its definition, significance in financial markets, and comparison with the Mumbai Interbank Bid Rate (MIBID).
