of Interest Rate Risk Supporting Document to the New Basel Capital Accord Issued for comment by 31 May 2001 January 2001 Superseded document Superseded document Table of contents SUMMARY .............................................................................................................................................. 1 I. SOURCES AND EFFECTS OF INTEREST RATE RISK ............................................................. 5 A. SOURCES OF INTEREST RATE RISK ....
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The Interest Rate Essentially‚ interest is nothing more than the cost someone pays for the use of someone else’s money. The interest rate that applies to investors is the Federal Reserve’s federal funds rate. This is the cost that banks are charged for borrowing money from Federal Reserve banks. Why is this number so important? It is the way the Federal Reserve (the "Fed") attempts to control inflation. Inflation is caused by too much money chasing too few goods (or too much demand for too little
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Title: Rate of Photosynthesis Introduction: Photosynthesis occurs in plants where the light energy changes to chemical energy. This process occurs in the chloroplast of the plant cell in order to have gas exchange in the organism. Purpose: To measure the effect of light intensity on the rate of photosynthesis in the leaf cells. Hypothesis: The higher the concentration of the sodium bicarbonate solution‚ the faster the leaf of the plant will rise to the surface of the water in the beaker‚ the
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The Rate of a Reaction The area of chemistry that deals with the rate or speed of chemical reactions is known a chemical kinetics. The word “kinetic” is derived from the Greek name kinitikos that means movement or motion. In the present context‚ the kinetic means the reaction rate or rate of a reaction that is defined as the change in concentration of a reactant or a product with time (M/s). Chemical reaction can be represented by the following general equation. Reactants Products It is very important
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shows a slight curve. The rate of evaporation increases with temperature since transpiration is a cooling mechanism to release heat. More stomata open as temperature increases as this allows a faster transpiration rate. Although‚ at much higher temperatures‚ plants close stomata to prevent excess water loss. b. The increasing humidity causes reduced transpiration rates. This is because atmosphere is saturated with water vapor and so not much can be absorbed by the plant as humidity increases.
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Internal Rate of Return In investment decision analysis you may need to calculate internal rate of return. “Internal rate of return (IRR) is the discount rate that gives the project a zero NPV” (McLaney‚ 2006). It is a good choice to use for investment projects. There is a formula for the internal rate of return: (A is the lower discount rate and B is the higher rate‚ a is the NPV at the lower rate and b is the NPV at the higher rate.) For example the Net Present Value (NPV) is 88 when the discount
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Raising the Interest Rate Principles of Finance Introduction After years of declining interest rates‚ we are facing a dilemma; should the Federal government increase rates to contain inflation‚ or keep rates low to boost the US economy? Increases in consumption of oil‚ metals‚ materials‚ and food‚ both foreign and domestic‚ are increasing demand. Prices are rising on a global scale as demand increases. Additionally‚ the US is experiencing rising costs for healthcare and education. Yet‚ the
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(Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors will be indifferent to interest rates available on bank deposits in two countries.[1] The fact that this condition does not always hold allows for potential opportunities to earn riskless profits from covered interest arbitrage. Two assumptions central to interest rate parity are capital mobility and perfect substitutability of domestic and foreign assets. Given foreign exchange market equilibrium
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where‚ distance and displacement are same. 6. When moving car returns to the same point what will be the ratio of a) Displacement to distance. b) Distance to displacement. 7. In a long distance race‚ the athletes take four rounds of a track such that the time of Finish is same as the line of start. The length of the track is 200 m. a) What is the total distance covered by the athletes? b) What is the displacement when they touch the finish line? c) Is the
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the repo rate is simply the annualised interest rate at which banks borrow money from the Reserve Bank of India (RBI) over a short term. This is generally seen as a way of tiding over a short-term liquidity crunch that is experienced by banks. However‚ to understand how this works‚ we need to understand the word repo. Repo technically stands for the word repurchase agreement. Most banks generally have a certain amount of government bonds or securities in their possession. When banks are in
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