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Libor

The London Inter-Bank Offered Rate is an interest-rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from o

Representative APR

A Representative APR is a financial service concept in which credit or loan interest rates quoted through advertising media are required to take into account all charges associated with a product, in

Monetary Policy Committee (United Kingdom)

The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets for three and a half days, eight times a year, to decide the official interest rate in the United Kingdom (the Ba

Rendleman–Bartter model

The Rendleman–Bartter model (Richard J. Rendleman, Jr. and Brit J. Bartter) in finance is a short-rate model describing the evolution of interest rates. It is a "one factor model" as it describes inte

Annual effective discount rate

The annual effective discount rate expresses the amount of interest paid or earned as a percentage of the balance at the end of the annual period. It is related to but slightly smaller than the effect

Cox–Ingersoll–Ross model

In mathematical finance, the Cox–Ingersoll–Ross (CIR) model describes the evolution of interest rates. It is a type of "one factor model" (short-rate model) as it describes interest rate movements as

ISDAfix

ISDAFIX refers to a worldwide common reference rate value for fixed interest rate swap rates. ISDAFIX was restructured and renamed "ICE Swap Rate" in April 2015. ISDAFIX was developed in 1998 as a coo

Floating interest rate

A floating interest rate, also known as a variable or adjustable rate, refers to any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest ove

Interest rate

An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depen

Repricing risk

Repricing risk is the risk of changes in interest rate charged (earned) at the time a financial contract’s rate is reset. It emerges if interest rates are settled on liabilities for periods which diff

Fisher equation

In financial mathematics and economics, the Fisher equation expresses the relationship between nominal interest rates and real interest rates under inflation. Named after Irving Fisher, an American ec

Official cash rate

The official cash rate (OCR) is the term used in Australia and New Zealand for the bank rate and is the rate of interest which the homogeneous central bank charges on overnight loans between commercia

Basis point

A basis point (often abbreviated as bp, often pronounced as "bip" or "beep") is one hundredth of 1 percentage point. The related term means one hundredth of 1 percent. Changes of interest rates are of

Euribor

The Euro Interbank Offered Rate (Euribor) is a daily reference rate, published by the , based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the

Credit card interest

Credit card interest is a way in which credit card issuers generate revenue. A card issuer is a bank or credit union that gives a consumer (the cardholder) a card or account number that can be used wi

Amortising swap

An Amortising swap is usually an interest rate swap in which the notional principal for the interest payments declines (i.e. is paid down) during the life of the swap, perhaps at a rate tied to the pr

Shadow rate

The shadow rate is an interest rate in some financial models. It is used to measure the economy when nominal interest rates come close to the zero lower bound. It was created by Fischer Black in his f

Foreign exchange swap

In finance, a foreign exchange swap, forex swap, or FX swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forwar

Mortgage constant

Mortgage constant, also called "mortgage capitalization rate", is the capitalization rate for debt. It is usually computed monthly by dividing the monthly payment by the mortgage principal. An annuali

Prague interbank offered rate

The Prague Inter Bank Offered Rate (PRIBOR) is the average rate at which banks are willing to lend liquidity on the Czech interbank money market and as such, reflects the price of money on the market.

Dual interest rates

Dual interest rates refers to a policy implemented by central banks which aims to influence lending rates independently of deposit rates as a means of stimulating economic activity. Policies similar t

Bootstrapping (finance)

In finance, bootstrapping is a method for constructing a (zero-coupon) fixed-income yield curve from the prices of a set of coupon-bearing products, e.g. bonds and swaps. A bootstrapped curve, corresp

€STR

Euro short-term rate (€STR) is a reference rate for the currency euro. The €STR is calculated by the European Central Bank (ECB) and is based on the money market statistical reporting of the Eurosyste

Eonia

Eonia (Euro Overnight Index Average) is computed as a weighted average of all overnight unsecured lending transactions in the interbank market, undertaken in the European Union and European Free Trade

Spot rate

No description available.

U.S. prime rate

The U.S. prime rate is in principle the interest rate at which a supermajority (3/4ths) of large banks loan money to their most creditworthy corporate clients. As such, it serves as the de facto floor

Nominal interest rate

In finance and economics, the nominal interest rate or nominal rate of interest is either of two distinct things: 1.
* the rate of interest before adjustment for inflation (in contrast with the real

Rate risk

In finance, rate risk is the risk of losses caused by interest rate changes. The prices of most financial instruments, such as stocks and bonds move inversely with interest rates, so investors are sub

Zero lower bound

The Zero Lower Bound (ZLB) or Zero Nominal Lower Bound (ZNLB) is a macroeconomic problem that occurs when the short-term nominal interest rate is at or near zero, causing a liquidity trap and limiting

Notional amount

The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount gen

Effective interest rate

The effective interest rate (EIR), effective annual interest rate, annual equivalent rate (AER) or simply effective rate is the percentage of interest on a loan or financial product if compound intere

Interest rate ceiling

An interest rate ceiling (also known as an interest rate cap) is a regulatory measure that prevents banks or other financial institutions from charging more than a certain level of interest.

Real interest rate

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 more formally by the Fisher equation, whi

TONAR

Tokyo Overnight Average Rate (TONA rate or TONAR) or Japanese Yen Uncollateralized Overnight Call Rate (Japanese: 無担保コールO/N物レート) is an unsecured interbank overnight interest rate and reference rate fo

SONIA (interest rate)

SONIA (Sterling Over Night Index Average) is the effective reference for overnight indexed swaps for unsecured transactions in the Sterling market. SONIA is a risk-free rate.

Overnight market

The overnight market is the component of the money market involving the shortest term loan. The overnight market is primarily used by banks and other financial institutions. Lenders agree to lend borr

Coupon leverage

Coupon leverage, or leverage factor, is the amount by which a reference rate is multiplied to determine the floating interest rate payable by an inverse floater. Some debt instruments leverage the par

Neutral rate of interest

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 full employment/maximum output while keeping inf

Credit channel

The credit channel mechanism of monetary policy describes the theory that a central bank's policy changes affect the amount of credit that banks issue to firms and consumers for purchases, which in tu

Immunization (finance)

In finance, interest rate immunization is a portfolio management strategy designed to take advantage of the offsetting effects of interest rate risk and reinvestment risk. In theory, immunization can

Interest rate guarantee

An interest rate guarantee (IRG) is an option on a forward rate agreement (FRA) that is handled over-the-counter (OTC).A call IRG is called a borrower's IRG. A put IRG is called a lender's IRG. As wit

SOFR

Secured Overnight Financing Rate (SOFR) is a secured interbank overnight interest rate. SOFR is a reference rate (that is, a rate used by parties in commercial contracts that is outside their direct c

TED spread

The TED spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt ("T-bills"). TED is an acronym formed from T-Bill and ED, the ticker symbol for th

Loanable funds

In economics, the loanable funds doctrine is a theory of the market interest rate. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. The term

Affine term structure model

An affine term structure model is a financial model that relates zero-coupon bond prices (i.e. the discount curve) to a spot rate model. It is particularly useful for deriving the yield curve – the pr

Subprime lending

In finance, subprime lending (also referred to as near-prime, subpar, non-prime, and second-chance lending) is the provision of loans to people in the United States who may have difficulty maintaining

FTSE MTIRS Index

The FTSE MTIRS Indices are designed to accurately move in direct correlation to OTC Interest Rate Swaps market with a total of 45 indices covering the USD curve from 2 years to 30 years including spre

Official bank rate

In the United Kingdom, the official bank rate is the rate that the Bank of England charges banks and financial institutions for loans with a maturity of 1 day. It is the British Government's key inter

SARON

SARON stands for Swiss Average Rate Overnight and represents the overnight interest rate of the secured funding market for the Swiss Franc (CHF). (Swiss Average Rate Overnight) is an overnight interes

Broker's call

aBroker's call, also known as the Call loan rate, is the interest rate relative to which margin loans are quoted. Individuals may borrow on margin a part of the funds they use to buy their securities

Interest rate parity

Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors interest rates available on bank deposits in two countries. The fact that this condition does n

Federal funds rate

In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an unco

Time preference

In economics, time preference (or time discounting, delay discounting, temporal discounting, long-term orientation) is the current relative valuation placed on receiving a good or some cash at an earl

Hull–White model

In financial mathematics, the Hull–White model is a model of future interest rates. In its most generic formulation, it belongs to the class of no-arbitrage models that are able to fit today's term st

Multi-curve framework

No description available.

Federal funds

In the United States, federal funds are overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to me

London Interbank Bid Rate

The London Interbank Bid Rate (LIBID) is a bid rate; the rate bid by banks on Eurocurrency deposits (i.e., the rate at which a bank is willing to borrow from other banks). It is the "other end" of the

Longstaff–Schwartz model

No description available.

Wall Street Journal prime rate

The Wall Street Journal Prime Rate (WSJ Prime Rate) is a measure of the U.S. prime rate, defined by The Wall Street Journal (WSJ) as "the base rate on corporate loans posted by at least 70% of the 10

List of sovereign states by central bank interest rates

This is a list of countries by annualized interest rate set by the central bank for charging commercial, depository banks for loans to meet temporary shortages of funds.

Risk-free rate

The risk-free rate of return, usually shortened to the risk-free rate, is the rate of return of a hypothetical investment with scheduled payments over a fixed period of time that is assumed to meet al

0% finance

0% financing or zero percent financing, alternatively known as discounted finance, is a widely used marketing tactic for attracting buyers of consumer goods, automobiles, real estate, or credit cards

Zero interest-rate policy

Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan and in the United States from December 2008

Fixed interest rate loan

A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. Variable

Interest rate swap

In finance, an interest rate swap (IRS) is an interest rate derivative (IRD). It involves exchange of interest rates between two parties. In particular it is a "linear" IRD and one of the most liquid,

Covered interest arbitrage

Covered interest arbitrage is an arbitrage trading strategy whereby an investor capitalizes on the interest rate differential between two countries by using a forward contract to cover (eliminate expo

Rule of 78s

Also known as the "Sum of the Digits" method, the Rule of 78s is a term used in lending that refers to a method of yearly interest calculation. The name comes from the total number of months' interest

SAIBOR

The Saudi Arabian Interbank Offered Rate (SAIBOR) is a daily reference rate, published by the Saudi Central Bank (SCB or SAMA), based on the averaged interest rates at which Saudi banks offer to lend

Interest rate channel

The interest rate channel is a mechanism of monetary policy, whereby a policy-induced change in the short-term nominal interest rate by the central bank affects the price level, and subsequently outpu

List of countries by commercial bank prime lending rate

This is a list of countries by a simple average of commercial banks' annualized interest rates charged on new loans to their most credit-worthy customers. Each entry is denominated in the respective n

Chen model

In finance, the Chen model is a mathematical model describing the evolution of interest rates. It is a type of "three-factor model" (short-rate model) as it describes interest rate movements as driven

Prime rate

A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to customers with good credit. Some variable interest rates may be expressed as a pe

Inflation derivative

In finance, inflation derivative (or inflation-indexed derivatives) refers to an over-the-counter and exchange-traded derivative that is used to transfer inflation risk from one counterparty to anothe

Reference rate

A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many fo

LIBOR market model

The LIBOR market model, also known as the BGM Model (Brace Gatarek Musiela Model, in reference to the names of some of the inventors) is a financial model of interest rates. It is used for pricing int

Annual percentage rate

The term annual percentage rate of charge (APR), corresponding sometimes to a nominal APR and sometimes to an effective APR (EAPR), is the interest rate for a whole year (annualized), rather than just

Vasicek model

In finance, the Vasicek model is a mathematical model describing the evolution of interest rates. It is a type of one-factor short-rate model as it describes interest rate movements as driven by only

7-day SEC yield

The 7-day SEC Yield is a measure of performance in the interest rates of money market mutual funds offered by US mutual fund companies. It is also referred to as the 7-day Annualized Yield. The calcul

Forward curve

The forward curve is a function graph in finance that defines the prices at which a contract for future delivery or payment can be concluded today. For example, a futures contract forward curve is pri

Forward rate

The forward rate is the future yield on a bond. It is calculated using the yield curve. For example, the yield on a three-month Treasury bill six months from now is a forward rate.

Interest rate risk

Interest rate risk is the risk that arises for bond owners from fluctuating interest rates. How much interest rate risk a bond has depends on how sensitive its price is to interest rate changes in the

EURONIA

EURONIA is the volume-weighted index average of interest rates on overnight euro deposits arranged by eight money brokers in London. It is thus a UK-based equivalent of the better known EONIA, which u

Marquette National Bank of Minneapolis v. First of Omaha Service Corp.

Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978), is a unanimous U.S. Supreme Court decision holding that state anti-usury laws regulating interest rates cannot

Qualified residence interest

Qualified residence interest is the most significant exception to the limitations imposed by § 163(h) of the Internal Revenue Code.

Bank rate

Bank rate, also known as discount rate in American English, is the rate of interest which a central bank charges on its loans and advances to a commercial bank. The bank rate is known by a number of d

Short-rate model

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 the future evolution of the short rate, usu

Overnight rate

The overnight rate is generally the interest rate that large banks use to borrow and lend from one another in the overnight market. In some countries (the United States, for example), the overnight ra

Chan–Karolyi–Longstaff–Sanders process

In mathematics, the Chan–Karolyi–Longstaff–Sanders process (abbreviated as CKLS process) is a stochastic process with applications to finance. In particular it has been used to model the term structur

Knut Wicksell

Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools

Mutan rate

The Mutan interest rate is the un-collateralized overnight call rate in Japan. It is the reference rate for JPY overnight unsecured transactions in the Japanese market. It was launched in July 1985 an

2000s United States housing bubble

The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, starte

Corporate debt bubble

The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross wo

Annual percentage yield

Annual percentage yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow a reasonable, single-point comparison of different offeri

Cumulative process

Cumulative process is a contribution to the economic theory of interest, proposed in Knut Wicksell's 1898 work, Interest and Prices. Wicksell made a key distinction between the natural rate of interes

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