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:
“When General Motors has to go to the bathroom ten times a day, the whole country’s ready to let go. You heard of that market crash in ‘29? I predicted that.... I was nursing a director of General Motors. Kidney ailment, they said; nerves, I said. Then I asked myself, “What’s General Motors got to be nervous about?” “Overproduction,” I says. “Collapse.””
—John Michael Hayes (b. 1919)
“Governments which have a regard to the common interest are constituted in accordance with strict principles of justice, and are therefore true forms; but those which regard only the interest of the rulers are all defective and perverted forms, for they are despotic, whereas a state is a community of freemen.”
—Aristotle (384–322 B.C.)
“In the U.S. for instance, the value of a homemaker’s productive work has been imputed mostly when she was maimed or killed and insurance companies and/or the courts had to calculate the amount to pay her family in damages. Even at that, the rates were mostly pink collar and the big number was attributed to the husband’s pain and suffering.”
—Gloria Steinem (20th century)