Role of Reserve Bank of Australia and Interest Rates

Definition of liaison judge An pursuance rate is the division yield on a financial security or asset such as a loan, bond or savings deposit. A variety of amour rate hold up in the deliverance because of differences in the take a chance, liquidness and maturity of various financial doers or assets. Different Types Interest pass judgments (% per annum) Bank Current Deposit (at call) - 0.00%, June 2005 Cash Rate get - 5.50% (+0.25%), 2nd March 2005 Banks Fixed Deposit Rate $5000 to $100,000 (5 socio-economic classs) - 4.75%, June 2005 Finance companionship Debentures (3 social classs) - 5.40%, June 2005 Large Business Overdraft Rate (3 year variable) - 9.10%, June 2005 Small Business Overdraft Rate (3 year variable) - 9.60%, June 2005 The Determinants of Interest place         Risk refers to the ability of the borrower to repay the wreaker the centre borrowed. The endangerment and reward convention states that the higher(prenominal) the risk the hig her the return or spare-time activity rate. conversely the lower the risk involved the lower the return or interest gainful to the lender. Eg: Debentures are loans to companies approve by follows assets whereas company notes are not. Debentures notes wherefore carry lower interest rates than company notes as they are more secure by being backed by company assets.         Liquidity refers to the occurrence with which financial instruments or assets can be converted into cash. commonly the higher the risk involved in lending notes the higher the interest rate demanded by the lender to filmdom the added risk. Similarly the slight liquid a financial instrument the higher the interest rate that has to be offered by the borrower to mother the lender to lend funds. Eg: Government bonds and company debentures and notes - A 1 year governance bond with a 5% interest rate reflects nominal risk and reasonable liquidity since... If you penury to get a full essay, order ! it on our website: BestEssayCheap.com

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