--%>
Assignment Help - homework help

Would there be positive interest rates with no risk

Would there be positive interest rates on bonds within a world along with absolutely no risk (no default risk, maturity risk, and so on)? Why would lender demand and borrower be keen to pay, a positive interest rate within such a no risk world?

Yes, there would be positive rate of interest within risk-free world.  It is because regardless of risk, lenders of money must postpone spending during the time the money is loaned. Lenders, then, lose the opportunity to invest their money for that period of time. In order to compensate for the cost of losing investment opportunities while they postpone their spending, lenders demand, and borrowers pay, a crucial rate of return, the real rate of interest.

 

   Related Questions in Finance Basics

  • Q : What is an Agency Agency: It is a legal

    Agency: It is a legal or official reference to a government association at any level in the state organizational hierarchy. Or Government organizations belong to the highest sta

    		•
  • Q : Define Appropriations Limit

    Appropriations Limit, State (SAL): The constitutional limit on the expansion of some appropriations from tax proceeds usually set to the level of the previous year's appropriation limit as adjusted for modifications in cost of living

    		•
  • Q : Creative destruction Normal 0 false

    Normal 0 false false

    		•
  • Q : Basic determinant of transactions

    Normal 0 false false

  • Q : Four-Tranche Sequential-Pay Structure

    1. How would you fund the tranche Z of the example in the securitization manual? 2. What reinvestment rate from the excess spread will guarantee that there will be sufficient money to pay0ff creditors of tranche Z? 3. When tranche Z creditors will get

    		•
  • Q : Health finance 7.2 The audiology

    7.2 The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Variable Cost Annual Direct Annual # Visits per Service Fixed Costs Basic exam $5 $50,000 3,000 Advanced examination $7 $

    		•
  • Q : Analysis on Financial Manangement

    Questions 1: (1) Your coin collection contains 40 1957 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2040, assuming they appreciate at a 10 percent annual rate? <

    		•
  • Q : Midterm Exam for FIN 6000 Please

    Please complete the midterm exam independently.  Don't discuss it with other students in the class.  Please email me if you have any clarifying questions.  <

    		•
  • Q : What do you mean by the term Year of

    Year of Appropriation (YOA): It refers to the initial year of an appropriation.

    		•
  • Q : What are Summary Schedules Summary

    Summary Schedules: Different schedules in the Governor’s Budget Summary that summarize state revenues, expenditures and other fiscal and personnel data for the past, present, and budget years.

    		•