Loan Prime Rate Options

2020 ◽  
Author(s):  
Zhanyu Chen ◽  
Kai Zhang ◽  
Hongbiao Zhao
Keyword(s):  
Prime Rate

Prime Rate Changes: Is There an Advantage in Being First?

1993 ◽  
Vol 66 (1) ◽  
pp. 69 ◽  
Author(s):  
Prafulla G. Nabar ◽  
Sang Yong Park ◽  
Anthony Saunders
Keyword(s):  
Prime Rate

Floating Rate Notes

2019 ◽  
pp. 265-282
Author(s):  
Aby Abraham ◽  
John Casares ◽  
Jibran Ali Shah
Keyword(s):  
United States ◽  
Risk Factors ◽  
Interest Rate ◽  
Liquidity Risk ◽  
The United States ◽  
Interest Rate Risk ◽  
Flip Flop ◽  
Deposit Rate ◽  
Floating Rate ◽  
Prime Rate

This chapter provides an overview of floating rate notes (FRNs). Although FRNs originated in Europe, their first introduction in the United States came in 1974 when Citicorp sold $650 million worth of its 15-year notes. Since that time, FRNs have evolved into a variety of types. FRN types covered in the chapter include the plain, capped, floored, collared, reverse, super, deleveraged, perpetual, and flip-flop. An FRN can have a maturity of up to 30 years and include periodic interest rate adjustments throughout its life. An FRN uses a reference rate, such as London Interbank Offer Rate (LIBOR), Treasury bill (T-bill) rate, prime rate, or domestic certificate of deposit rate plus a spread to determine its coupon rate. The chapter provides a discussion of such risk factors as interest rate risk, credit risk, call/reinvestment risk, liquidity risk, and market risk. Additionally, it covers FRN valuation using spread for life, effective margin, total adjusted margin, discount margin, and option-adjusted spread methods.

The pricing of the prime rate

1982 ◽  
Vol 6 (2) ◽  
pp. 277-296 ◽  
Author(s):  
Michael A. Goldberg
Keyword(s):  
Prime Rate

CO-MOVEMENTS OF THE PRIME RATE, CD RATE, AND THE S&P FINANCIAL STOCK INDEX

1998 ◽  
Vol 21 (4) ◽  
pp. 469-482 ◽  
Author(s):  
Bradley T. Ewing ◽  
James E. Payne ◽  
Shawn M. Forbes
Keyword(s):  
Stock Index ◽  
Prime Rate

scholarly journals Consumer financial vulnerability: identifying transmission linkages that could give rise to higher levels of consumer financial vulnerability

2019 ◽  
Vol 19 (1) ◽  
pp. 112-136 ◽  
Author(s):  
B De Clercg ◽  
J A Van Tonder ◽  
C J Van Aardt
Keyword(s):  
South Africa ◽  
Vulnerability Index ◽  
Disposable Income ◽  
Coefficient Of Determination ◽  
Data Series ◽  
Strong Impact ◽  
Financial Vulnerability ◽  
Transmission Path ◽  
Income Ratio ◽  
Prime Rate

Several macroeconomic indicators point to high consumer financial vulnerability in South Africa. These include, inter alia, a relatively high household debt-to-disposable income ratio, household consumption expenditure outstripping household disposable income and a declining real household net wealth-to-disposable income ratio. 12In a 2009 study, the first level of possible predictors of consumer financial vulnerability was identified. However, no study has been conducted in South Africa to establish the transmission path of consumer financial vulnerability. This paper attempts to identify such a transmission path by determining the order in which the four aspects of the consumer financial vulnerability index, namely consumer income, expenditure, savings and debt servicing vulnerability, impact on one another, making consumers more vulnerable. This was done by means of an econometric modelling technique called Vector Auto regression (VAR) using consumer financial vulnerability data series covering the period Q2 2009 to Q2 2012. 13The VAR results show that expenditure vulnerability received the highest coefficient of determination score. This indicates that expenditure problems are the Achilles’ heel of South African households, which activates the postulated consumer financial vulnerability index (CFVI) transmission path. To determine the extent to which other macroeconomic variables impact on the postulated CFVI transmission path, a consumer price index (CPI) time series was entered exogenously into the existing VAR equation. It appears from the results obtained that the exogenous 113 Consumer financial vulnerability inclusion of CPI in the model made a dramatic difference with respect to income and expenditure vulnerability. By including the prime lending rate variable exogenously in the CFVI transmission path, the strong impact of the prime rate on expenditure vulnerability became evident. Finally, by adding the expanded unemployment variable exogenously to the CFVI transmission path in addition to the CPI and prime rate variables, debt servicing vulnerability was strongly impacted. From the CFVI transmission path findings, it became evident that consumers are not able to afford their required necessities, which leads to their becoming expenditure vulnerable. If consumers cannot generate more income to compensate, they become income vulnerable. They draw on their savings to finance the excess expenditure and become savings vulnerable, and if they cannot afford the necessary credit they require to finance their expenditure and have no savings left, they become debt servicing vulnerable

scholarly journals Determinantes macroeconómicos del comportamiento de índice general de la Bolsa de Valores de Colombia

Aglala ◽  
2015 ◽  
Vol 6 (1) ◽  
pp. 199
Author(s):  
Andrés David Pájaro Castro ◽  
Geraldine Ramos Romero
Keyword(s):  
Prime Rate

Esta investigación muestra la relación existente entre el comportamiento del Índice General de la Bolsa de Valores de Colombia con variables macroeconómicas tales como la tasa de cambio nominal, tasa de interés externa (prime rate) y tasa de interés (interna) de colocación, tomando como referencia el periodo mensual de enero 2003 a marzo de2012. Para esto, se estimó un modelo econométrico mediante el método de los mínimos cuadrados ordinarios, donde se contrasta el contexto y la teoría económica con los resultados obtenidos, los cuales arrojaron parámetros significativos en las variables explicativas asumidas.

scholarly journals Effects of the financial crisis and low interest rate environment on interest rate pass-through in Czech Republic, Hungary and Romania

2021 ◽  
Vol 71 (4) ◽  
pp. 551-567
Keyword(s):  
Czech Republic ◽  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Weighted Average ◽  
Real Economy ◽  
Cointegration Tests ◽  
Rate Environment ◽  
Prime Rate ◽  
Pass Through

Abstract In order for monetary policy’s interest rate channel to operate smoothly and effectively, the relevant retail interest rates of the real economy should react quickly and follow the movements of the prime rate. It has been observed that this connection has weakened since the financial crisis and it was suggested that the so called Weighted Average Cost of Liabilities (WACL) might be a better proxy for the banks’ marginal costs than the prime rate or interbank rate. In this study the WACL for Czech Republic, Hungary and Romania is calculated by applying cointegration tests and ARDL models. I examined whether their long-run relationships with the retail loan rates are more stable. Results: 1. Using the WACL instead of the interbank rate yields slightly more stable long-term relationships with the retail loan rates, and the WACL has been proved to be somewhat more stable than the interbank rate. 2. The interest rate pass-through has been efficient for the household loan rates in all three countries, but only in Romania for the corporate loan rates. 3. The results suggest that the central banks can effectively influence the commercial banks’ financing costs even in a low interest rate environment, although this cost represents only one component of the loan rates, and the movements of other components can offset the changes of the prime rate.

Sign in / Sign up

Export Citation Format

Share Document