--%>
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 Investment Management

    Investment Management: It has two general definitions, one associating to advisory services and the other associated to corporate finance. In the initial instance, a financial advisor or services company gives inve

    		•
  • Q : Define Executive Branch Executive

    Executive Branch: One of the three branches of state government, accountable for administering and implementing the state's laws and programs. The Governor's Office and those individuals, departments, and offices reporting to it (that

    		•
  • Q : Define Limited-Term Position

    Limited-Term Position (LT): Any place that has been authorized only for a particular length of time with a set termination date.Limited-term positions might be authorized throughout the budget procedure or in transactions approved by the D

    		•
  • Q : Explain accepting or rejecting of

    For a specified IOS and MCC, how do financial managers decide which proposed capital budgeting projects to accept, and which to reject? For a specified IOS and MCC, all independent projects that plot on the IOS above the MCC are accepted. Those

    		•
  • Q : Mascot Simulation Simulation with

    Simulation with Crystal Ball Provided Workbook: Mascot Simulation Relevant Readings:"Discounted Cash Flow Modeling" folder + Text

    		•
  • Q : What is Pooled Money Investment Account

    Pooled Money Investment Account (PMIA) It is a State Treasurer's Office accountability account maintains by State Controller's Office to account for short-term investments procured by the State Treasurer's Office as designated by the Pooled Money Inve

    		•
  • Q : What are a banks main reserves What are

    What are a bank's main reserves? Vault cash & deposits in the bank's account at the Fed are utilized to satisfy these reserve requirements; they are termed as primary reserves.  These primary reserves are non-interest-earning assets hel

    		•
  • Q : Have mergers influenced competition

    Have mergers influenced competition?Federal Reserve data illustrates that measured on the local level, where competition takes place; markets have in fact experienced more banking competition, not less, in the past decade.

    		•
  • Q : Determine per unit cost of production

    Normal 0 false false

  • Q : Define Bill Bill : It is a draft of

    Bill: It is a draft of proposed law represented to the Legislature for performance. (A bill has bigger legal formality and standing than a resolution.) OR An invoice, or document statement, of an amount owing for s

    		•