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Fin 100 chapter 8
  • From Business, Finance
  • Due on 09 Feb, 2018 12:00:00
  • Asked On 09 Feb, 2018 05:07:21
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(LO 8.1)

What is the "interest rate"  and how is it determined?

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Interest rate answer
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  • Submitted On 09 Feb, 2018 09:35:29
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An interest rate is the percentage or proportion of debt that is charged as interest on the borrower. The In...
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INTEREST RATE AND ITS DETERMINATION
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  • Submitted On 10 Feb, 2018 07:38:01
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Interest rate is basically the profit or revenue from funds lended. How are interest rates determined: the lender perspective The logic behind interest rate calculations is pretty straightforward, and it generally boils down to perceived risk. When a lender gives you money in the form of a loan, they’re essentially betting that you’ll pay that money back. If it is a good bet that you’ll pay the money back, lenders are generally willing to accept a smaller rate on the loan. If, on the other hand, the lender believes that there is a relatively good chance that you won’t pay the loan back, they’ll want to charge a higher rate as compensation for accepting the increased risk associated with you as a borrower. This underlying risk/reward logic isn’t just a factor in lending. It’s actually an important influence in economic systems and consumer decision-making - impacting everything from financial markets to international relations. So how do lenders determine how much risk they should associate with a given borrower? In most cases, potential factors that lenders evaluate in determining an interest rate for a given borrower ...
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Fin 100 chapter 8 DQ Answer
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  • Submitted On 10 Feb, 2018 01:19:01
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Discussion Questions: What is interest rate, and how is it determine? Answer: Interest rate is the basic price that equates the demand for and supply of loanable funds in the financial market. The interest rate is determined b...
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