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Topic: Interest rate floor

Related Topics

Interest rate cap

Caplet

Interest Rate Swap

Interest

Put option

Swaption

Call option

Stock option

Financial mathematics

Derivatives market

Put

Probability

Interest Rate Swap

Interest Rate Swap

	IMAGE • Interest Rate Management Products (Site not responding. Last check: 2007-10-13)
		An interest rate swap is a contract between two parties to exchange a series of fixed rate and floating rate interest payments over a predefined period of time, without exchanging the underlying principal amount referred to as a “notional” principal amount.
		Interest rate swaps are used to convert interest rate basis (e.g., from floating to fixed or fixed to floating) to enable issuers to lower their costs of borrowing.
		A synthetic advance refunding, combines an interest rate swap (the swap actually begins on the date the old bonds are called) which is executed today, at today's prevailing interest rates, with the issuance of variable rate refunding bonds, which occurs at the call date of the old bonds.
	image.temporarywebsite.com /products-interest.asp (2080 words)

	Interest Rate Floor
		Floors are purchased for a premium and typically have maturities between 1 and 7 years.
		If the index rate is below the floor rate, the payment is based upon the difference between the two rates, the length of the period, and the contract's notional amount.
		Floors are used by purchasers of floating rate debt who wish to protect themselves from the loss of income that would result from a decline in interest rates.
	www.riskglossary.com /articles/floor.htm (485 words)

	I Definitions: Campbell R. Harvey's Hypertextual Finance Glossary
		Interest that is due only at the maturity date rather than periodically over the life of the loan.
		Expression that the interest rate differential between two countries is equal to the difference between the forward foreign exchange rate and the spot rate.
		States that the interest rate differential between two countries should be an unbiased predictor of the future change in the spot rate.
	www.duke.edu /~charvey/Classes/wpg/bfglosi.htm (8113 words)

	Managing interest rate risk in a rising-rate environment RMA Journal, The - Find Articles
		Therefore, a bank's interest rate gap would be the value of floating-rate loans on the bank's balance sheet less the value of customer deposits.
		An interest rate cap is a series of interest rate call options set at the same exercise rate and that have expiration dates at each point when the underlying liability (in this case, customer deposits) is expected to reprice.
		On the other hand, an interest rate floor is a series of interest rate put options with the same exercise rate that have expiration dates at each point when the underlying liability is expected to reprice.
	www.findarticles.com /p/articles/mi_m0ITW/is_3_87/ai_n14897605 (919 words)

	Adjustable Rate Mortgages ARMS in Minnesota and Wisconsin, Summit Mortgage Corporation
		Adjustable Rate Mortgages (ARMs) start out as though they were fixed rate mortgages for a period of time, but then have periodic changes in the interest rate which causes changes in your monthly Principal and Interest payment.
		It is the interest rate you lock in for the initial adjustment period.
		For example if the index is 1.75% and the margin is 2.25%, the sum is 4.00% and that will be the newly adjusted rate for the next period of time, so long as the proposed adjustment doesn't exceed the periodic adjustment cap, the life time cap or the interest rate floor.
	www.louauger.com /ARMs.htm (1314 words)

	CPA Journal Online
		The difference between the index rate and the cap rate or $20,000 ([12%-10%] X $1,000,000) is paid by the financial institution that sold the cap to DEF.
		An interest rate floor can be thought of as a series of conditional receivables for the holder and as a series of conditional payables for the counter party.
		An interest rate swap is an agreement where one party (company A) contracts to pay another party (company B) a predetermined fixed interest rate for a fixed period of time.
	www.nysscpa.org /cpajournal/1995/OCT95/f341095.htm (3723 words)

	exotics
		The relevant Implied Forward is the Swap rate for the period of the Floor or the FRA rate for a Floorlet.
		Interest rate risk management tend to centre on the effectively funding long term assets with short term liabilities.
		If interest rates do fall in the future the institution should be able to borrow at lower rates and take advantage of the additional business activity.
	ciberconta.unizar.es /bolsa/efloor.htm (1418 words)

	Interest rate cap and floor - Wikipedia, the free encyclopedia
		An interest rate cap is a derivative in which the buyer receives money at the end of each period in which an interest rate exceeds the agreed strike price.
		The interest rate cap can be analyzed as a series of European call options or caplets which exists for each period the cap agreement is in existence.
		An interest rate floor is a series of European put options or "floorlets" on a specified reference rate, usually LIBOR.
	en.wikipedia.org /wiki/Interest_rate_cap_and_floor (464 words)

	Business: Credit cards rates miss lower interest rate party
		Interest rates have fallen dramatically this year, but the benefits have been slow to accrue to credit card borrowers.
		He said this year's rate cuts are expected to save credit card issuers $23.8-billion as the gap widens between their cost of funds and the rates they are charging.
		Those rates have fallen from 15.46 percent at the beginning of the year to 14.25 percent, according to surveys by Bankrate.com.
	www.sptimes.com /News/100401/Business/Credit_cards_rates_mi.shtml (518 words)

	Income Property, Interest Rate, Installment, Investment Terms
		A published rate, such as the average interest rate or yield on Treasury bills.
		In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.
		Interest rate, program terms and conditions are subject to change without notice.
	www.inter-lake-lending.com /Glossary_I.html (703 words)

	The Learning Corner: Interest Rate Caps and Collars
		These are instruments that protect floating rate issuers/borrowers from a rise in interest rates that would otherwise increase their borrowing costs.
		When the loan or bond rate exceeds the cap limit (usually referred to as the “strike” level) the borrower pays the higher interest rate on the loan or bond.
		If the interest rate for an interest period is 6%, the seller will pay to the issuer the difference between 5% and 6% or 1%.
	www.cdfa.net /cdfa/press.nsf/pages/800 (663 words)

	Interest Rate Floor (Site not responding. Last check: 2007-10-13)
		An Interest Rate Floor is a contract that guarantees a minimum level of interest rate.
		A Floor can be guaranteed for one particular date.
		Floors generally guarantee a minimum level of either 3 or 6 month LIBOR or whatever the prevailing floating rate index is in a particular market.
	www.citibank.com /elsalvador/svco/english/svco126.htm (60 words)

	RBC Capital Markets - Fixed Income Derivatives
		The Floor, in exchange for a premium, ensures that the purchaser receives no less than the floor level on his or her investment.
		More specifically, we concentrate on the simultaneous purchase of a Cap and sale of a Floor by an issuer who wishes to acquire some interest rate protection on an outstanding loan and who is willing to give up some of the advantages associated with a fall in variable rates.
		The total interest rate paid on the loan during the life of the Interest Rate Collar will be contained between the Floor and Cap strike levels, adjusted for the Stamping Fee (the total rate does not take into account the inflow and outflow of cash, if applicable, generated by the Collar).
	www.rbccm.com /0,,cid-16651_,00.html (592 words)

	KAMB.org - Kansas Association of Mortgage Brokers
		The index is generally a published number or percentage, such as the average interest rate that will be charged on the ARM.
		This interest rate is subject to any caps that are associated with the mortgage.
		In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) wih payment change limitations.
	www.kamb.org /glossary.asp?filter=I (410 words)

	Floor - Wikipedia, the free encyclopedia
		In most of Europe, and thus in British and Commonwealth usage, the floor at the ground level is the ground floor, and the floor above is the first floor, which maintains the continental European use dating from the days of the construction of palaces.
		The principal floor is the story which contains the chief apartments, whether on the ground floor or the floor above; in Italy they are always on the latter and known as the piano nobile.
		The story below the ground floor is called the basement even if only a little below ground level, or the cellar; the story in a roof is known as the attic or the loft.
	en.wikipedia.org /wiki/Floor (359 words)

	Interest Rate Floor
		The floor seller compensates the buyer with a payoff when the reference interest rate falls below the floor's strike rate.
		For example, assume that an investor is securing a floating rate loan and is looking for protection against lost income that would arise if interest rates were to decline.
		Suppose the floor rate is 8% and that on a particular day, the rate on the investor's floating-rate loan of $1 million is 7%.
	www.investopedia.com /terms/i/interestratefloor.asp (236 words)

	Interest Rate Swap (Site not responding. Last check: 2007-10-13)
		An Interest Rate Swap is an exchange of cash flows for prescribed periods on prescribed dates.
		One party receives a fixed rate of interest in return for paying a floating rate of interest.
		There is no exchange of principal but the interest amounts are calculated on a defined notional principal.
	www.citibank.com /elsalvador/svco/english/svco124.htm (50 words)

	CEPR Discussion Paper Abstracts (Site not responding. Last check: 2007-10-13)
		Unless lower short nominal interest rates are associated with significantly lower interest volatility, a lower average rate of inflation, which will be associated with lower expected nominal interest rates, increases the odds that the zero nominal interest rate floor will become a binding constraint.
		The second is to lower the zero nominal interest rate floor.
		The terms of the conversion can be set to achieve any positive or negative interest rate on currency.
	www.cepr.org /pubs/new-dps/dplist.asp?dpno=2203 (375 words)

	Liquidity traps: how to avoid them and how to escape them
		A necessary condition for this is that the short nominal interest rate is constrained by its lower bound, typically zero.
		The empirical likelihood of the UK economy hitting the zero nominal rate bound is considered by investigating the relationship between the level of the short nominal interest rate and its volatility.
		The second is, again, to lower the zero nominal interest rate floor.
	ideas.repec.org /p/boe/boeewp/111.html (680 words)

	SSRN-Possible Effects of European Monetary Union on Switzerland: A Case Study of Policy Dilemmas Caused by Low ...
		Alternative policy responses to temporary and persistent asset preference shifts and the consequent pressures for exchange rate appreciation are examined.
		Simulations of a stylized macroeconomic model of the Swiss economy indicate that monetary policy is likely to be the most effective tool for stabilizing output in the short run, but at the cost of a temporary increase in inflationary pressures.
		The simulations highlight the dilemmas faced by policymakers in an environment with low inflation and nominal interest rates.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=882253 (342 words)

	Overcoming the Zero Bound on Interest Rate Policy
		The paper proposes three options for overcoming the zero bound on interest rate policy: a carry tax on money, open market operations in long bonds, and monetary transfers.
		A variable carry tax on electronic bank reserves could enable a central bank to target negative nominal interest rates.
		A carry tax could be imposed on currency to create more leeway to make interest rates negative.
	ideas.repec.org /a/mcb/jmoncb/v32y2000i4p1007-35.html (311 words)

	interest rate floor Definition
		For an adjustable rate mortgage, the minimum interest rate that could be charged.
		Understand what points are, and what term or duration is best for you.
		Give this definition a rating from 1 to 5 (5 being the best)...
	www.investorwords.com /2543/interest_rate_floor.html (142 words)

	Interest Rate Ceiling
		The absolute maximum rate of interest that a financial institution can charge for an adjustable rate mortgage or loan.
		When a borrower is charged interest above the established legal rate they are usually dealing with a loan shark.
		- Learn and ensure the different rates quoted to you by banks and institutions are what they claim to be.
	www.investopedia.com /terms/i/interestrateceiling.asp (167 words)

	CBOT - Interest Rate
		The CBOT Interest Rate Swap Futures continue to gain market acceptance.
		The attached presentation outlines the contract's key benefits, market maker commitments, recent performance and an example of how Swap futures can be directly compared to the OTC Swap market.
		CBOT Binary Options on FOMC Target Rate contracts set new volume record as total exceeds 5,000 contracts for first time.
	www.cbot.com /cbot/pub/page/0,3181,830,00.html (202 words)

	Globes [online] - Tyrah: Klein told me there’s no interest rate floor
		Globes [online] - Tyrah: Klein told me there’s no interest rate floor
		Israeli stocks in NY Tyrah: Klein told me there’s no interest rate floor
		Manufacturers Association president Oded Tyrah: Governor of the Bank of Israel David Klein denied reports that he would stop cutting the interest rate.
	www.globes.co.il /DocsEn/did=776849.htm (65 words)

	Westpac Internet -Personal Banking Homepage (Site not responding. Last check: 2007-10-13)
		Package your home loan with Westpac and you could get 0.7%p.a.
		off the standard variable rate of selected home loans of $250,000 or more.
		Go to our Security section for the latest on fraud and safeguarding your computer
	westpac.com.au /manage/pdf.nsf/.../FSR_IntRateFloorPDS.pdf?OpenElement (278 words)

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