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Interest Rate Primer Report

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					This Interest Rate Primer Report gives a definition of what ?interest? is and the different
types of interests including simple interest, compound interest, fixed and floating rates,
real interest, and cumulative interest or return. This report additionally discusses how
the various interests affect rates on inflation. This document also details how interest
rates affect demand in a particular region or country. This document uses language that
is commonly used in this area of business. Read or use this report to update one on
what an interest rate is, how it affects inflation, and demand.
             Interest Rate Report

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Table of Contents

Definition ...................................................................................................................................................... 4
Types of interests .......................................................................................................................................... 4
   Simple interest .......................................................................................................................................... 4
   Compound interest: .................................................................................................................................. 4
   Fixed and floating rates............................................................................................................................. 4
   Real interest .............................................................................................................................................. 5
   Cumulative interest or return ................................................................................................................... 5
Affect of Interest Rates on Inflation: ............................................................................................................ 5
   Official Bank rate....................................................................................................................................... 5
   Relation of the authorized Bank rate with the inflation ........................................................................... 5
The effect on demand:.................................................................................................................................. 6
   Saving and spending decisions.................................................................................................................. 6
   Cash flow ................................................................................................................................................... 6
   Asset prices ............................................................................................................................................... 6
   Exchange rates .......................................................................................................................................... 6




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Definition

An ‘Interest’ is the cost paid on loans or borrowed money. A return is received by the lender for letting
go of further utilization of their money, such as (for example) postponing their own consumption of
money. The original sum which is lent is known as the "principal amount,” The “interest rate” is
therefore a percentage of the principal amount, that is to be paid for a given time period, or until the
borrower pays back the whole principal amount.


Types of interests

Simple interest

This type of interest is established by multiplying the principal amount to the interest
rate/percentage (per occasion) by the quantity of time period. It is not complex/compound.

Compound interest:

In economics, there is a phenomenon that the interest rates will be revealed for a term of one year and
would be compounded yearly; this is also known as effective interest rates. The interest rates when
lending is concerned are known as nominal interest rate. However, loans also include a variety of non-
interest fees and charges (like point systems on mortgage loans in the USA; also a lot of jurisdictions
necessitate lenders to offer information on the ’accurate’ price of finance, which is often stated as yearly
percentage rates, to express the full cost of a loan such as interest rate following the extra fee and
expenditures (however, the details vary sometimes). In economics, constant compounding phenomenon
is frequently used because of precise numerical properties.

Fixed and floating rates

Loans may also not always have a particular interest rate throughout the duration of the loan (even
though compound interest is gene
				
DOCUMENT INFO
Description: This Interest Rate Primer Report gives a definition of what ?interest? is and the different types of interests including simple interest, compound interest, fixed and floating rates, real interest, and cumulative interest or return. This report additionally discusses how the various interests affect rates on inflation. This document also details how interest rates affect demand in a particular region or country. This document uses language that is commonly used in this area of business. Read or use this report to update one on what an interest rate is, how it affects inflation, and demand.
This document is also part of a package Financial Statements and Projections 22 Documents Included