The Structure of Interest Rates and Real Interest Rates Coursework

The Structure of Interest Rates and Real Interest Rates - Coursework ExampleThe credit card firms are not usually bound towards any form of specific limits regarding their ultimate interest rates. They can thus charge any amount they may wish to as long as they watch commendable competitive rates with other existing credit card firms.Finally, the rates are often higher on credit cards so as to encourage people to make payments on time. It is based on the reasoning that the longer you delay your repayments, the higher the interest penalties.The corporate bonds credit ratings are often higher than those offered by the government bonds to a greater extent. This is because the corporate bonds usually have low ratings, thereby giving stunned an implication of a higher credit risk possibility as compared to the investment-grade bonds (Schwartzman, 1992). Therefore, they endure to offer a little bit higher rates so as to curb with the increased risks. On the other hand, the government b onds credit ratings are often lower because they are not in the end secured by any form of assets. They are instead backed up by the credit and full faith of the issuer. This is hence what brings out this form of disparity. turning point generally refers to a situation when there is a temporary decline with regards to the economic stability, whereby the trade and the industrial operations are totally cut back. It is generally set by the fall in the GDP over a given successive quarters. Based on this, the interest rates tend to be reduced since it impacts on all the businesses (Guttentag & Cagan, 1969). Both small and large ventures tend to fall typically during this period. Ultimately, at such a moment the business borrowers and consumers are the ones who tend to determine the level of interests they are opting to pay for the borrowed money.There is often a greater interaction between the tax systems and interaction. This is due to a major hold fast factor between them that touc hes on the aspect of the amount of