Questions tagged [interest]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
0 votes
1 answer
38 views

Interest rate to discount losses in a guarantee portfolio

The government X issues a guarantee for N years to provide funding for a given economic sector. Then, the bank Y provides funding to companies operating in such economic sector with the guarantee of ...
0 votes
1 answer
136 views

Why does the Fed raise the FFR before reducing bond holdings?

In recent months, the Federal Reserve has been purchasing bonds at a decreasing rate. This is evident in the flattening of the slope of the total assets plot. The Fed's total assets plot... The ...
2 votes
3 answers
95 views

Central bank use of interest to combat inflation

I continue being puzzled by the interest rate rises being used as a lever to lower inflation in the present climate. If I understand correctly, the rationale of higher interest is to dampen demand ...
-2 votes
2 answers
195 views

MMT and bond sales

Proponents of Modern Monetary Theory claim that bond sales are unnecessary and only help central banks set interest rates (which should be 0% anyway according to theory) and to provide safe interest-...
12 votes
10 answers
5k views

Why do people buy high dividend stock?

Dividend payout from stock makes the stock price fall by the same value. It is just rearranging your money instead of getting real interest like in bonds. Then why do some people aim at high dividend ...
0 votes
1 answer
87 views

interest rate risk vs duration risk?

Is there a difference between interest rate risk vs duration risk? I feel as though I have heard them used interchangeably but I don't know if there is any distinguishing factor between the two.
1 vote
1 answer
151 views

Do banks pay interest on the money they create?

A bank takes in \$10 in deposits and makes \$100 in loans, creating \$90 of new money. They pay the depositor interest on the \$10 and earn interest on the $100 loan. It looks to me like they don't ...
0 votes
2 answers
68 views

Taking a loan to pay another loan with the same interest

I had a discussion with family members about how taking a loan to pay another loan with the same interest is basically wasting money and they didn't agree. To make things clearer, say loan 1 is 100 ...
1 vote
0 answers
36 views

Help with Macroeconomics Question: IS-LM Model [closed]

I know this is supposed to be a simple question, but I need to check the answers for it and as it was a past exam question I do not have the results for it.If anyone can help out, that would be ...
0 votes
1 answer
100 views

How to reconcile 1) the International Fisher Effect and 2) rising interest rates leading to currency appreciation?

The International Fisher Effect implies that a currency with a lower nominal interest rate will appreciate against another currency with a higher nominal interest rate. However, in general, a currency ...