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6 votes

Can this transactions log become "money"?

There are some huge problems with your idea. There is no surplus value in your scheme. If you trade Alice a couple of cups of coffee for fixing a broken window, then you and Alice are square. But now ...
5 votes

Can this transactions log become "money"?

This is not money because there is no unit of account Referring to the definition of money that people gave you in the comments, the biggest element lacking in this scheme is that there is no unit of ...
  • 151
2 votes

Is there any example of being in debt not being considered particularly bad?

Debt in itself is a physiological part of our economies, both private and public debt. What is considered bad and legally and socially sanctioned is not repaying a debt, or making loss for a long ...
  • 1,502
2 votes

Is there any example of being in debt not being considered particularly bad?

For individual investors, debt can be considered not to be a bad thing as long as the return on their investment is higher than the interest rate on the debt ($r>i$). For example, if you have the ...
  • 2,454
1 vote

How can debt be larger than gdp?

The key difference to consider is that GDP (or income) is a flow variable, whereas debt is a stock variable. A flow variable is something measured over a certain period of time (months, quarters, ...
  • 1,543
1 vote

How can debt be larger than gdp?

GDP is yearly gross income of a country. Debt can be larger than a yearly gross income of a country, company or a person. Do you have mortgage on your house? If so your debt is probably several times ...
  • 1,581
1 vote

How come Greek debt is only a few dozen bps above US debt?

There is a lot of misunderstanding and contradiction in your question. If you are concerned that the yield for Greek government bonds is too low, you cannot simultaneously be concerned that there ...
  • 2,887
1 vote

How does debt-financed public infrastructure spending stimulate the economy if money supply is unchanged?

When a national government embarks on public infrastructure projects to stimulate the economy, the money spent on the infrastructure projects increases the money supply. This is not generally true. ...
  • 48.7k
1 vote
Accepted

Effect of tax on required return on debt (and equity)

Question 1: Is that a useful way of thinking about how the lender actually sets the required rate of return? No lender actually gets $R_D$, a bond holder does not pay corporate rate on their interest ...
  • 48.7k
1 vote

Cost of debt, taxes and WACC

It may help to focus on the idea behind WACC calculations. It is supposed to show the return that both bondholders and shareholders demand to provide the company with capital. In the simplest case of ...
  • 2,887
1 vote
Accepted

long term and short term debt cycle

There is some evidence for debt cycles e.g. see works of Minsky (1987), Suter (1992) or Dafermos (2017). However, there isn't distinction being made between short and long-term debt cycles like in the ...
  • 48.7k
1 vote

Are fixed rate mortgages better in periods of low interest?

The fixed and variable interest rate loans compete against each other. As a consequence the expected cost of them should be more or less equal otherwise why would ever someone take variable interest ...
  • 48.7k
1 vote

Are fixed rate mortgages better in periods of low interest?

This is a long comment rather than a full answer. I think the OP should clarify the meaning of "lock" by creating an example. Usually, by "locking" a rate, you are slightly ...
  • 1,696
1 vote

Are fixed rate mortgages better in periods of low interest?

What do you mean by "better"? Do you mean risk, by any chance? Thinking in terms of risk this could mean changes or fluctuations in present value of debt for instance. Then a floating rate ...
  • 303
1 vote

Does a private company that is 100% financed by a bank loan have a WACC equal to the interest rate?

@keepAlive's answer includes a good point about tax but misses another, more subtle issue. As Berk & DeMarzo note in Chapter 12 of "Corporate Finance - 5th Global Edition" (see box "...
1 vote

Why do lenders dislike early loan repayments?

Lenders are backing new loans and loaning out more money anticipating "X" amount of returned money on a Loan they bought. When there is a run on the bank and everyone pays their loans off ...

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