Interest Rate And Interest Rates - 1402 Words

1.1 Background of the Study 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 depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed (Wikipedia). Interest rate as policy instrument can be used to foster meaningful macroeconomic stability,the rate of interest exacts its influence on the macro economy by transmitting through savings, investment, output, employment, money supply and balance of payment. As a return on investment in financial assets, interest rate serves as†¦show more content†¦The country s agricultural products is divided into two main groups: food crops and cash crops produced for home consumption and exports. The special interest of Government in the Agricultural sector is due to its relevance in the provision of raw material s for industries and most importantly the provision of food for the teaming population of Nigeria. (Akiri and Adofu 2007). Basically, agriculture provides 65% employment opportunities for the population to reduce poverty and contributes to the growth of the economy (Okoro, 2011). The development of agriculture in Nigeria has been slow despite the various agricultural policies. In fact, the government recognized the unhealthy condition(such as lack of access to technology, lack of access to farm inputs, lack of financial empowerment, high risk etc.) of Nigerian agricultural sector since 1970, and has formulated and introduced a number of programmes and strategies aimed at resolving this situation. These measures includes, introduction of scheme such as the River Basin Development Authority (1979), National Accelerated Food Production (NAFP) was introduced in 1972, Operation Feed the Nation (OFN) was inauguratedShow MoreRelatedThe Interest Rate And Interest Rates1746 Words   |  7 Pagestime in the future, the present good always commands a premium in the market over the future. This premium is the interest rate, and its height will vary according to the degree to which people prefer the present to the future, i.e., the degree of their time-preferences. (Ebling, 1996, p.82) In determining the originary interest rate, Mises thinks that the rate of originary interest directs the investment activities of the entrepreneurs. It determines the length of waiting time and of the periodRead MoreInterest and Real Rate1740 Words   |  7 PagesP6–1 Interest rate fundamentals: The real rate of return Carl Foster, a trainee at an Investment banking firm, is trying to get an idea of what real rate of return investors Are expecting in today’s marketplace. He has looked up the rate paid on 3-month U.S. Treasury bills and found it to be 5.5%. He has decided to use the rate of change In the Consumer Price Index as a proxy for the inflationary expectations of Investors. That annualized rate now stands at 3%. On the basis of the information Read MoreInterest Rate Risk3594 Words   |  15 PagesInterest Rate Risk (IRR) Management What is Interest Rate Risk : Interest rate risk is the risk where changes in market interest rates might adversely affect a bank’s financial condition.   The management of Interest Rate Risk should be one of the critical components of market risk management in banks. The regulatory restrictions in the past had greatly reduced many of the risks in the banking system. Deregulation of interest rates has, however, exposed them to the adverse impacts of interest rateRead MoreThe Concept of Interest and Rate4140 Words   |  17 Pagesof $100 be after 5 years at 10% compound interest? a. $161.05 b. $134.54 c. $127.84 d. $151.29 e. $143.65 2. Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on 3-year government bonds is 6%, how much is the bond worth today? a. $2,011.87 b. $2,591.45 c. $2,324.89 d. $1,888.92 e. $2,854.13 3. Sims Inc. earned $1.00 per share in 2000. Five years later, in 2005, it earned $2.00. What was the growth rate in Sims earnings per share (EPS) over theRead MoreTerm Structure Of Interest Rates Essay1250 Words   |  5 Pagesthe term structure of interest rates, we study the yield curve. Yield curves are normally upward sloping reflecting a positive relationship between terms to maturity and yield to maturity, or they can be downward sloping (inverted), or flat. Yield curves may however also depict complicated shapes. An upward sloping yield shows that long term interest rates are higher than short term interest rates. This is due to long term bonds having to compensate for the interest rate risk and inflation expectationsRead MoreInterest and Risk-free Rate1254 Words   |  6 Pages2013 6:30 PM IST (UTC +0530). Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100. In accordance with the CourseraRead MoreTerm Structure of Interest Rate1588 Words   |  7 PagesEXPLAIN THE CONCEPT OF THE TERM STRUCTURE OF INTEREST? WHAT INFLUENCE DOES THE BANK OF ENGLAND HAVE OVER THE TERM STRUCTURE AND WHY IS IT IMPORTANT FOR MONETARY POLICY To understand the term structure of interest rate we need to elaborate how interest rates function and how they are determined. Interest rates are a vital tool to all the macro-economic policy objectives of a government such as control of inflation, investment as well as employment. Interest rates refer to the price paid by deficit agentsRead MoreComposition of Interest Rates2326 Words   |  10 PagesComposition of interest rates In economics, interest is considered the price of money, therefore, it is also subject to distortions due to inflation. The nominal interest rate, which refers to the price before adjustment to inflation, is the one visible to the consumer (i.e., the interest tagged in a loan contract, credit card statement, etc). Nominal interest is composed by the real interest rate plus inflation, among other factors. A simple formula for the nominal interest is: i = r + Ï€ WhereRead MoreEssay about Interest Rates In The Economy1528 Words   |  7 PagesInterest Rates in the Economy It has been an experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a persons ability to handle the more ambiguous and qualitative relationships that dominate day-to-day financial decision-making (Greenspan). This quote is from Allan Greenspan, the Chairman of the Federal Reserve Board who was arguably the most powerful man in the world. Greenspan was also extremely financially intelligentRead MoreInterest Rates : The Core Of The Monetary Policy1404 Words   |  6 PagesInterest rates are considered to be the core of the monetary policy set by economists and policy makers and that is applied by central banks to achieve certain economic objects regarding measures like inflation and output. In other words, interest rates are just means to influence dimensions of macroeconomic activity and central banks usually do not have any inherent preference for one interest rate level versus another. Empirical litera ture has revealed that changes in the supply of bank reserves