Category Archives: News

Real vs. Nominal Interest Rates: An Overview  Interest rates are the cost of borrowing and saving money and are expressed as a percentage of the total amount of a loan or investment. They represent the total return lenders receive when they offer loans or when people put their money into savings accounts. Rates can be expressed inContinue reading “Real vs Nominal Rates”

The keys to understanding why “the” interest rate changes over time are simple price theory (supply and demand), the theory of asset demand, and the liquidity preference framework of renowned early twentieth-century British economist John Maynard Keynes. [1] Like other types of goods, bonds and other financial instruments trade in markets. The demand curve forContinue reading “Why Rates Change”

What factors change interest rates? One big factor is inflation. As the price level rises, so too do interest rates, or at least what economists call nominal interest rates, the type of rates we’ve discussed so far. If nominal rates do not increase (and they often don’t, or can’t), lenders might receive more nominal dollarsContinue reading “Inflation and Interest Rates”

What Is Money?  Money is a system of value that facilitates the exchange of goods in an economy. Using money allows buyers and sellers to reduce their transaction costs, compared to barter trading. The first types of money were commodities, whose physical properties made them desirable as a medium of exchange. In contemporary markets, money can includeContinue reading “Understanding Currency”

The four major types of instruments that you are likely to encounter include discount coupon bonds, simple loans, fixed-payment loans, and coupon bonds. A discount bond (aka a zero coupon bond orsimply a zero) makes only one payment, its face value on its maturity or redemption date, so its price is easily calculated using theContinue reading “Debt Instruments”

Like financial markets, financial intermediaries are highly specialized. Sometimes called the indirect method of finance, intermediaries, like markets, link investors/lenders/savers to borrowers/entrepreneurs/spenders but do so in an ingenious way, by transforming assets. Unlike facilitators, which, as we have seen, merely broker or buy and sell the same securities, intermediariesbuy and sell instruments with different risk,Continue reading “Financial Intermediaries”

Markets come in a variety of flavors to accommodate the wide array of financial instruments or securities that have been found beneficial to both borrowers and lenders over the years. Primary markets are where newly created (issued) instruments are sold for the first time. Most securities are negotiable. In other words, they can be soldContinue reading “Financial Markets”

What Is the Law of Supply and Demand?  The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. The theory defines the relationship between the price of a given good or product and the willingness of people to either buyContinue reading “Supply and Demand”

The Difference Individuals who are intrigued by money and have a keen interest in buying and selling often wonder whether finance and economics are related and, if so, how so. They also wonder what type of careers these two fields offer. Although economics and finance have many similarities, they are actually two very different fields.Continue reading “Differentiating Between Finance and Economics”

Finance is a term for matters regarding the management, creation, and study of money and investments. It involves the use of credit and debt, securities, and investment to finance current projects using future income flows. Because of this temporal aspect, finance is closely linked to the time value of money, interest rates, and other related topics.Continue reading “What is Finance?”

The Financial Bureau is moving online after nearly a decade of hands on education. The shift to online provides a more accessible platform for those who yearn to learn. The augmenting technological embedding within our society is palatable. We look forward to continuing our journey shedding light on all corners of the financial jungle. SeekingContinue reading “The Financial Bureau”