Market Interest Rates
There is a market for investments which ultimately includes the money market, bond market, stock market and currency market as well as retail financial institutions like banks.
Exactly how these markets function are sometimes complicated. However, economists generally agree that the interest rates yielded by any investment take into account:
- The risk-free cost of capital
- Inflationary expectations
- The level of risk in the investment
- The costs of the transaction
This rate incorporates the deferred consumption and alternative investments elements of interest.
Read more about this topic: Interest Rate
Famous quotes containing the words market, interest and/or rates:
“Today the tyrant rules not by club or fist, but, disguised as a market researcher, he shepherds his flocks in the ways of utility and comfort.”
—Marshall McLuhan (1911–1980)
“Parents do not give up their children to strangers lightly. They wait in uncertain anticipation for an expression of awareness and interest in their children that is as genuine as their own. They are subject to ambivalent feelings of trust and competitiveness toward a teacher their child loves and to feelings of resentment and anger when their child suffers at her hands. They place high hopes in their children and struggle with themselves to cope with their children’s failures.”
—Dorothy H. Cohen (20th century)
“[The] elderly and timid single gentleman in Paris ... never drove down the Champs Elysees without expecting an accident, and commonly witnessing one; or found himself in the neighborhood of an official without calculating the chances of a bomb. So long as the rates of progress held good, these bombs would double in force and number every ten years.”
—Henry Brooks Adams (1838–1918)