Has anyone ever warned you, “don’t get caught swimming naked”? It may sound strange, but it’s a reference to Warren Buffet’s famous quote “Only when the tide goes out do you discover who’s been swimming naked”. As a financial leader, it is your responsibility to know when the tide is going out so that you can prepare not to
See Also: Economic Indicators Consumer Price Index Supply and Demand Elasticity The Feds Beige Book Z-Score Model What is Inflation? What is inflation and what does it measure? Inflation measures the rate at which prices increase for consumer goods and services. Inflation also measures the rate at which a currency’s purchasing power declines. If consumer
Interest Expense Formula Interest expense calculations involve 4 parts: Principal, Rate, Time, and Compounding. Use the following formula to calculate simple interest expense (which excludes compounding): Interest Expense = Principal X Rate X Time To calculate the compound interest rate, use the following formula: Principal X (1+ (R / N))(N X T) Where: R =
See Also: Future Value Discount Rate Exchange Traded Funds Backwardation Interest Rate Swaps Arbitrage Contango Definition Contango is a term used to describe the forward yield curve when it is upward sloping and the price of a future commodity is above that of the spot rate. This is the opposite of backwardation. Contango Meaning Contango
Recently, I read an article by Dan Patrick of the Wall Street Journal detailing how superlow interest rates, while certainly beneficial to borrowers, are hurting bank profits and the industry’s ability to recover from the financial crisis. According to Mr. Patrick, some of the negative effects of these artificially low rates we could see are more
There has been a lot of press lately regarding all of the cash that companies are sitting on. In addition, the government is talking about making it easier for companies to borrow money. Between the cash on hand and the loans they obtain companies will then be able to hire employees. It just doesn’t work
Fed Chief Ben Bernanke recently stated that the Fed might raise rates to cut off future financial asset bubbles, but mounted a defense against critics who claim that the Fed’s failure to do so led to the most recent financial asset bubble. Fed Open to Raising Rates I think this belies the dichotomy present in
Per FT the FOMC has left the discount rate and fed funds target rate unchanged. FOMC press release available here.
Federal Reserve Chairman Ben Bernanke stated today that he expects interest rates to remain low for an “extended period” while the economy struggles out of the recession, given high unemployment and tight credit. He expects rates to remain low as, according to him, inflation is under control. Is your company prepared to face an extended,
Fed Chairman Ben Bernanke predicts the future in a opinion article in The Wall Street Journal today. Mr. Bernanke goes to some detail explaining how he is going to suck out the liquidity sloshing around in the economy. It makes quite a bit of sense. I can see how the next phase of the economy
One can’t help but watch the actions of the Federal Reserve, Treasury Department, the FASB, the Congress, etc…and wonder what new crises for which we are being set up. In the near term greater inflation and higher interest rates seem likely. But in the long run are we not simply setting ourselves up for a
Interesting article in the April 23rd Wall Street Journal on page C1 highlighting the divergence of Libor from U.S. Prime Rate. Let’s dive into what the difference between Libor vs Prime Rate is. What’s the Difference Between Libor vs Prime Rate? Libor has been increasing while the Prime Rate has been dropping. You need to
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