INTEREST RATES - INTERESTRATES...

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Click to edit Master subtitle style  4/12/11 INTEREST RATES
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 4/12/11 FOMC Plays a Large Role…. .
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 4/12/11 U.S. Ten Year Historical Yields:
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 4/12/11 Current Yield Curve
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 4/12/11 Short Term Interest Rates Prime rate - The basic interest rate on short-term loans that the largest commercial banks charge to their most creditworthy corporate customers. Discount rate - The interest rate that the Fed offers to commercial banks for overnight reserve loans. Federal funds rate - Interest rate that banks charge each other for overnight loans of $1 million or more. Banker’s acceptance - A postdated check on which a bank has guaranteed payment. Commonly used to finance international trade transactions. Call money rate - The interest rate brokerage firms pay for call money loans from banks. This rate is used as the basis for customer rates on margin loans. Commercial paper - Short-term, unsecured debt issued by the largest corporations. Repurchase Agreements - repurchase agreement , also known as a  repo rp or  sale and repurchase agreement , is the sale of securities together with an  agreement for the seller to buy back the securities at a later date. The repurchase  price will be greater than the original sale price, the difference effectively 
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 4/12/11 *****STIR Cont’d***** U.S. Treasury bill (T-bill) - A short-term U.S. government debt instrument issued by the U.S. Treasury. London Interbank Offered Rate (LIBOR) - Interest rate that international banks charge one another for overnight Eurodollar loans. Euro LIBOR refers to deposits denominated in euros—the common currency of 12 European Union countries. EURIBOR is an interest rate that also refers to deposits denominated in euros. However, EURIBOR is based largely on interest rates from the interbank market for banks in the European Union. HIBOR is an interest rate based on Hong Kong dollars. Hibor is the interest rate among banks in the Hong Kong interbank market. Eurodollars - U.S. dollar denominated deposits in banks outside the United States.
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 4/12/11 Types of Rate Quotes A Pure Discount Security is an interest-bearing asset: It makes a single payment of face value at maturity . It makes no payments before maturity . Longer-dated securities are called zero coupon. There are several different ways market participants quote interest rates. Bank Discount Basis Bond Equivalent Yields (BEY) Annual Percentage Rates (APR) Effective Annual Rates (EAR)
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 4/12/11 Bank DISCOUNT Basis The Bank Discount Basis is a method of quoting interest rates on money market instruments. It is commonly used for T-bills and banker’s acceptances.
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This note was uploaded on 04/11/2011 for the course FIN 321 taught by Professor Blose during the Winter '07 term at Grand Valley State.

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INTEREST RATES - INTERESTRATES...

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