How many interest rates are there?
In this video, the focus is on different types of interest rates used in corporate finance.
It begins by defining interest rates and categorizing them into market-determined rates, entity-set rates, and negotiated rates. The Fisher equation is introduced to distinguish between nominal and real interest rates, emphasizing the impact of inflation on investment returns.
The video also explains the difference between simple and compounded interest rates, highlighting how compounding can significantly boost returns over time. Additionally, it touches on spot rates, forward rates, and the yield curve, providing insights into market expectations and their implications for economic conditions.
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