Iceland's long-term interest rate is just over 8%, compared with over 13% for Greece.
Loans provided by BNDES are based in the so called TJLP long-term interest rate, which currently stands at 5%, while traditional loans carry a premium over benchmark Selic rate, currently at 12.25%.
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The arbitrage has to do with the fact that the earnings yield on equities (earnings divided by price) is often more than the aftertax cost of money (which is, roughly, two-thirds of whatever your long-term interest rate is).
They return about the same as long-term bonds with lower interest-rate risk and pay substantially better than short-term bonds.
In other words, the Fed gave a specific frame for its short-term interest rate policy, but not clear frame for its long-term rate policy not QE3 for the time being.
The U.S. has swapped its relatively long-term expensive debts for short-term ones with a low interest rate.
For example, the Goldman Sachs monetary-conditions index (based on a weighted average of short-and long-term interest rates and the trade-weighted exchange rate) suggests that America's monetary policy is currently at its tightest since 1989, largely reflecting the strong dollar.
It works like this: the Fed buys long-term treasury bonds (which currently have a higher interest rate) rather than short-term ones.
Normally a long-term loan attracts a higher interest rate because the money is tied up for longer and thus subject to more risks.
With any long-term bond the investor is at the mercy of interest-rate fluctuations.
On the bond markets, the Spanish government's long-term cost of borrowing fell slightly, to an implied interest rate of just under 6% for 10-year debt.
In fact, the basic math says that we should be willing to do anything literally anything that is required to get our real long-term GDP growth rate up above the real interest rate on federal debt (assumed by the Social Security Trustees to be 2.90%).
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If the borrowing taxpayer has met the requirement, he or she would have a long-term loan to be paid back at a competitive interest rate.
They threaten future interest rate spikes, further discouraging long-term investment.
Currently, a parent can sell shares of the family-owned business to the child for a fixed long term interest rate as low as 2.52%, and not incur a gift tax because of the loan rate.
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Chart Analysis : The chart of the CBOE Interest Rate Ten-Year T-Note Index has a long-term downtrend going back to the 1990s that is now at 4.4%.
Primarily based on Eurodollars, U.S. Treasuries, swaps and other dollar-related instruments that customers can utilize to manage short, medium and long term interest rate risk, interest rate contracts are the largest class of financial products traded on CME Group.
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The current top rate on long-term capital gains is 15%, and the top rate on ordinary income such as interest and salary is 35%.
If the exchange rate and share prices remain unchanged, this requires both short- and long-term interest rates to rise by just under 1.5 percentage points.
The exception is the ECB's Long Term Refinancing Operation (LTRO), which provides banks with three-year liquidity at its main interest rate, currently 1%, against a wide array of collateral.
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Except, it comes after the institution released its first ever long-term forecasts for interest rates, and stated that it expected rates to be at their current historic low rate until at least the end of 2014.
If shares change in value, that must reflect a change in investors' assessment of either the prospective dividend flow (for example, because of fears about the future level of profits) or the right discount rate (for example, because of a change in inflationary prospects or in long-term real interest rates), or both.
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