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Similarly, an interest rate floor is a derivative contract in which the buyer receives payments at the end of each period in which the interest rate is below the agreed strike price. Caps and floors can be used to hedge against interest rate fluctuations. For example, a borrower who is paying the LIBOR rate on a loan can protect himself against ...
A word floor is used for more financial terms in financial area and means minimum, e.g. the interest rate floor is the lowest interest rate the lender can offer you to an adjustable (sometimes called variable) rate mortgage. [3]
The annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualized. The interest rate has been characterized as "an index of the preference . . . for a dollar of present [income] over a dollar of future income". [1]
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 the central bank's capacity to stimulate economic growth.
With a fixed-rate product, such as a personal loan or savings account, the interest rate you sign up for is the interest rate you’ll either pay or earn for the life of the product.
This is an accepted version of this page This is the latest accepted revision, reviewed on 18 December 2024. This article is about the financial term. For other uses, see Interest (disambiguation). Sum paid for the use of money A bank sign in Malawi listing the interest rates for deposit accounts at the institution and the base rate for lending money to its customers In finance and economics ...
Fixed income analysis is the process of determining the value of a debt security based on an assessment of its risk profile, which can include interest rate risk, risk of the issuer failing to repay the debt, market supply and demand for the security, call provisions and macroeconomic considerations affecting its value in the future.
Valuation in a World of CVA, DVA, and FVA: A Tutorial on Debt Securities and Interest Rate Derivatives. World Scientific. ISBN 978-9813222748. Alexander Sokol (2014). Long-Term Portfolio Simulation: For XVA, Limits, Liquidity and Regulatory Capital. Risk Books. ISBN 978-1782720959. Osamu Tsuchiya (2019). A Practical Approach to XVA. World ...