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:
“Writing ought either to be the manufacture of stories for which there is a market demand—a business as safe and commendable as making soap or breakfast foods—or it should be an art, which is always a search for something for which there is no market demand, something new and untried, where the values are intrinsic and have nothing to do with standardized values.”
—Willa Cather (1876–1947)
“Society has really no graver interest than the well-being of the literary class.”
—Ralph Waldo Emerson (1803–1882)
“[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)