The neutral rate of interest, previously called the natural rate of interest, is the real (net of inflation) interest rate that supports the economy at...
10 KB (1,319 words) - 07:10, 11 August 2022
The real interest rate is the rate of interest an investor, saver or lender receives (or expects to receive) after allowing for inflation. It can be described...
15 KB (2,119 words) - 15:00, 25 April 2024
without the use of a forward contract to hedge against exposure to exchange rate risk, interest rate parity is said to be uncovered. Risk-neutral investors...
24 KB (3,088 words) - 21:04, 27 March 2024
evidence of compound interest dates roughly 2400 BC. The annual interest rate was roughly 20%. Compound interest was necessary for the development of agriculture...
71 KB (10,075 words) - 06:45, 13 August 2024
In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to...
28 KB (2,790 words) - 19:14, 27 July 2024
have to have a higher rate of return in order to induce any investors to hold it. In practice, to infer the risk-free interest rate in a particular currency...
11 KB (1,560 words) - 18:21, 30 June 2023
A short-rate model, in the context of interest rate derivatives, is a mathematical model that describes the future evolution of interest rates by describing...
26 KB (3,697 words) - 08:06, 8 May 2024
portfolio price P(0) is the expected value of C under the risk-neutral probabilities. If the interest rate R were not zero, we would need to discount...
16 KB (2,699 words) - 22:59, 22 August 2024
associated with it. It explains that the neutral rate of interest is the hypothetical, single rate of originary interest that would prevail in an imaginary...
132 KB (12,084 words) - 20:38, 24 August 2024
consist of just one asset), as well as to interest rate modeling in general, where yield curves must be arbitrage free with respect to the prices of individual...
12 KB (1,076 words) - 08:45, 20 August 2024
actually a vertical line indicating the natural rate of unemployment. According to Friedman, money was not neutral in the short run, because economic agents...
13 KB (1,737 words) - 04:25, 15 November 2023
Yield curve (redirect from Term structure of interest rates)
driven by the short end (under risk-neutral equivalent martingale measure) and accordingly by short-term interest rates. The mathematical model for Vasicek's...
45 KB (5,682 words) - 21:54, 6 April 2024
present value of the future cash flows is equal to the initial investment, and it is also the interest rate at which the total present value of costs (negative...
36 KB (5,479 words) - 10:28, 26 June 2024
explained this rapid rate of mutation by suggesting that the majority of mutations were neutral, i.e. had little or no effect on the fitness of the organism....
25 KB (3,425 words) - 03:34, 14 August 2024
Monetary policy (redirect from Interest rate targeting)
Interest rate targeting is generally the primary tool, being obtained either directly via administratively changing the central bank's own interest rates...
75 KB (9,078 words) - 04:35, 14 August 2024
Vasicek model (category Interest rates)
evolution of interest rates. It is a type of one-factor short-rate model as it describes interest rate movements as driven by only one source of market risk...
8 KB (1,244 words) - 11:13, 10 November 2023
SARON (redirect from Swiss Average Rate Overnight)
SARON stands for Swiss Average Rate Overnight and is a measurement of the overnight interest rate of the secured funding market denominated in Swiss Franc...
8 KB (954 words) - 15:45, 5 February 2024
or interest rate etc.). The position is then established such that a change in the value of the protected-asset, is offset by a change in value of the...
6 KB (468 words) - 08:01, 31 July 2024
Gender neutrality (redirect from Gender neutral)
Gender neutrality (adjective form: gender-neutral), also known as gender-neutralism or the gender neutrality movement, is the idea that policies, language...
72 KB (8,297 words) - 20:31, 11 August 2024
Black–Derman–Toy model (category Short-rate models)
short-rate model used in the pricing of bond options, swaptions and other interest rate derivatives; see Lattice model (finance) § Interest rate derivatives...
8 KB (727 words) - 15:54, 19 March 2024
Forward price (redirect from Forward rates)
the risk-neutral measure. The forward measure and the risk neutral measure are the same when interest rates are deterministic. Forward rate Forward measure...
5 KB (845 words) - 23:55, 21 October 2023
Black–Scholes model (section Interest rate curve)
return (instead replacing the security's expected return with the risk-neutral rate). The equation and model are named after economists Fischer Black and...
63 KB (9,357 words) - 03:22, 25 August 2024
delineated aside. The most common transactions attracting CVA involve interest rate derivatives, foreign exchange derivatives, and combinations thereof...
10 KB (1,035 words) - 08:43, 31 July 2024
Cumulative process (category Interest rates)
money rate of interest. The money rate of interest, to Wicksell, is the interest rate seen in the capital market; the natural rate of interest is the...
6 KB (900 words) - 02:45, 8 April 2020
of the nominal money supply or the rate of inflation. An economy exhibits the classical dichotomy if money is neutral, affecting only the price level, not...
4 KB (478 words) - 04:25, 15 November 2023
Net zero emissions (redirect from Carbon-neutral)
from each other. For example, some standards for carbon neutral certification allow a lot of carbon offsetting. But net zero standards require reducing...
57 KB (7,112 words) - 09:18, 29 August 2024
Hedge (finance) (section Types of hedging)
energy, precious metals, foreign currency, and interest rate fluctuations. Hedging is the practice of taking a position in one market to offset and balance...
33 KB (4,324 words) - 15:46, 19 August 2024
substitutes. Only risk neutral investors are in the system. The demand for money therefore depends only on income and the interest rate, and investment depends...
25 KB (3,793 words) - 18:32, 2 October 2023
Rational pricing (section Risk neutral valuation)
prices instead of rates, as prices are more readily available. Per the logic outlined, rational pricing applies also to interest rate modeling more generally...
26 KB (3,730 words) - 08:01, 27 May 2024
Government debt (section Exchange rate risk)
fiscal measures. Government debt accumulation may lead to a rising interest rate, which can crowd out private investment as governments compete with...
30 KB (3,340 words) - 23:36, 21 August 2024