This Report Includes Information Regarding To The Background And Significance Of Interest Rate To The Capital Market.

2439 words - 10 pages

Executive SummaryThe purpose of this report is to analyze and discuss the effects of interest rate to the financial system of Australia. In this report, relevant sources from books and websites are used appropriately.Firstly, this report will briefly explain the background and significance of the low interest rate. The RBA maintained low interest rate because of weak global ecnomy and the need to boost local economy and investments. The significance of low interest rate can be shown in the impact to financial institutions, financial instruments and financial markets.Secondly, it will focus on four financial instruments, which are equity, government securities, corporate bonds and bank term loans. Low interest rate have increased share price of many companies as well as their profit. Regarding to securities, when interest rate is low, the rate of Treasury bonds will be low as well. Similarly, the interest rate of bank term loans will be low under such situation.Thirdly, it also analyses how will the long-term low interest rate affect financial market, participants and financial institutions. In the share market, the transactions will be increased due to prospective economic growth. It can also increase the demand for mortgages, so the banks can raise the volume of mortgages in order to increase their revenue.Finally, it will present the future development of interest rate. It is estimated that interest rates will be raised by the end of the year, however it is still uncertain consider other curial factors. Obviously there are both advantage and disadvantage in maintaining low interest rate. However, the interest rate change is heavily depending of the housing sector and the rest of the world.1. Background1.1 Low interest rate remain unchangedAfter Reserve Bank of Australia (RBA) has cut interest rate from 6.25 per cent in February to 5 per cent in April in early 2001 (http://www.rba.gov.au), when the economic slowdown in the United States and Japan, attended with the weak domestic economic growth and weakness of Australian currency. However now in 2003 after the strong growing of Australian currency and the world economy slowly recover with Australia's weak export, the interest rate remained at 4.75 from June 2002 to August 2003. When the TBA board meeting commenced early September 2003, it was decided that the interest rate remains unchanged (The Australian Financial Review, 03/09/2003).Figure 1. Interest rate movement from 1987 to 2003Source: http://www.rba.gov.auThe interest rate has been fluctuating significantly in the last 17 years in Australia (as Figure 1. above). It shows that the interest rate reached a very high peak in 1989, which was 18.35 per cent. Then the interest rate dropped enormously to a very low point in 1992, 93 and 94. In 1994, the interest rate was only 4.75%, which showed the lowest point. As shown in Figure 1, it is clear that there is a great reduction of interest rate from 18.35% in 1989 to 4.75% in 2003.1.2...

Find Another Essay On This report includes information regarding to the background and significance of interest rate to the capital market.

Interest Rate Report Scenario for Big Drive Auto Economics

727 words - 3 pages . Attractive pricing strategies and creative incentives can help. Once the yield curve plays out, demand will increase and market will correct.Dependence on Monetary VariablesVariables other than interest rates, such as business cycles, cause cyclical movements in the economy. During expansion, output and employment rise. A rapid rise in inflation may occur, due to the expansion cycle. Conversely, during a recession, decline in output of goods and services

This report is about ancient Egyptian pyramids and how they were built. also includes information on why they were built. Title: Egyptian Pyramids

814 words - 3 pages be a perfect square with each side aligned to the true north, south, east and west. They did this by watching the rising and setting of a star.Over four thousand men lived nearby working on the construction. This icluded engineers, designers, architects, master masons, surveyors, toolmakers and quarrymen. Quarrymen cut the stones for the pyramids. The workers were very skilled in using copper chisels, wooden mallets and wedges to cut the block

Capital Punishment: This piece shows both sides to the death penalty. Includes history and statistics.

2929 words - 12 pages Capital PunishmentThe death penalty dates back to colonial times, where American colonies inherited this system of law from the British. When European settlers came to the new world, they brought the practice of capital punishment with them. Of course each of the colonies had it's own criminal code. In early Puritan Massachusetts, the list of capital crimes included witchcraft and adultery. While in Pennsylvania limited the death penalty to

The aim of this report is to provide information, measures and suggestions to the Chancellor of the Exchequer on what and how to deal with the inflation in UK

4157 words - 17 pages it hard to export products to other countries due to the higher price. That is to say, the UK companies have to save the costs for the purpose of being survived in the competitive market. Meanwhile, the import prices decreases. And this will make the cost of the companies to be lower.If the there is an increase in the value of exchange rate will result in rising in interest rates. In this way, an appreciation of the exchange rate could

Background to the Quran

1386 words - 6 pages of information that would help make sense of the content. Apparently this is what motivated early Muslims prepare literature that provided some context for the book . The hadith refers to large collections of writings from the early years of Islam containing information about the prophet and commentary on the Quran. This information provides some context to the Quran, without which many sections of it would be difficult if not impossible to

Understanding the Exchange Market Rate - Pound to US Dollar (GBP/USD) Exchange Rate

3315 words - 13 pages correct market failure in the interest of the public (Wikipedia, 2014). There were some government that attempt to influence the value of their own currency. For example the China country have save their undervalued currency in the way to make the Chinese export become more competitive. This showed that when the government have make a step by saved their currency this will influence the fluctuation rate for that nations. When the import or the

"Monopoly is against the interest of the consumer." To what extent do you agree with this statement and why?

1388 words - 6 pages monopolise the industry. However, in most cases I feel that a monopoly is not in the best interests of the consumer. An example of this is British Telecom, before when it was the only telecommunications company; its prices were much too high, once new companies came into the market their prices had to come down due to the price competition that they were now facing. In general I feel that for a consumer's interest, we need competition within most industries to keep prices down, which unfortunately a monopoly does not provide.Bibliography.Economics: A mini text, Buckingham, D. 1997Principles of Economics; Henderson and Poole.1991www.economic.co.uk

The federal Reserve and the Beige Book: How information might affect the decision to raise interest rates.

1080 words - 4 pages ://www.federalreserve.gov/fomc/beigebook/2004/20040421/default.htm. It contains information on consumer spending, tourism, manufacturing, real estate and construction, agriculture, natural resource industries, labor markets, wages and prices and banking and finance in each district. The report is primarily seen as an indicator of how the Fed might act at its upcoming meeting regarding interest rates.Consumer spending has been the key to the United States economy since

Title: Homer and The Iliad Task: Write a report on the significance of Homer and the Iliad to ancient Greece and to Western culture.

604 words - 2 pages Homer and the Iliad had great value and significance to ancient Greece and to Western culture.Ionia, where Homer is believed to have lived, is in the Eastern Mediterranean, where eastern and western cultures met. This would explain how Homer's literature was widely spread across to Western culture. The exact dates of Homer's life are unknown, but it is thought that he lived during the 8th and 9th century B.C. According to legend, Homer was blind

Artificial Intelligence. This paper describes what the government hopes to accomplish with AI. It includes some of the inventions and what we hope to accomplish with this technology.

511 words - 2 pages Artificial IntelligenceArtificial intelligence is a branch of computer science concerned with making computers think. It is the first project dedicated solely to artificial intelligence. It is also defined as the project of creating machines that can carry out tasks normally thought to require human intelligence. AI will enable humans to speak directly with computers, and is engineering inspired by biology. Through AI, we hope to invent machines

This report describes the Introduction to Marketing and its purpose.

713 words - 3 pages should be able to have better knowledge (than the competitor) about customer wants and needs, one can develop a new and better way to approach the market.The individual that I interviewed for this study is an executive for AT&T that has well over 10 years marketing experience in many various business environments. The importance of selling involves understanding the background, foundation and mentality which truly identifies the important

Similar Essays

Currency And Interest Rate Swap: A Case Study Of The Australian Foreign Exchange Market

3038 words - 12 pages result as the ten year recorded was neither positive nor negative. This clearly indicates that there is a decreasing factor in the bonds as the time of maturation grows.DataData Source and Data Gathering ProceduresThe information regarding the analysis of the information on the need to reduce the risks associated with the international currency and the interest rate swap markets. The research methodologies applied here included both qualitative

Sources Of Capital Lands' End Paper Covers Sources Of Capital For The Company Lands' End. 582 Words Also Includes Brief History Of The Company And Link To The Annual Report.

584 words - 2 pages plan is a good incentive for the employees. It allows the board of directors to award key employees with shares of the company's common stock. (Lands' End, 2001)Investments are also a source of capital for Lands' End. Mainly, in fiscal year 2001, information technology was the focus to ensure proper upgrades to all of their facilities and daily operational needs. In fiscal year 2001, $45 million was reported spent on their information technology

"Tyranny The Blind Man's Game" A Literary Analysis Of Antigone By Sophocles. Explores Overall Themes Purpose Of Writing And Some Background Information, Includes Work Cited.

697 words - 3 pages government. Sophocles- realizing and utilizing the Athenian's fear of tyranny- writes Antigone in order to demonstrate the true effects of a dictatorial monarch by portraying a theme pertaining to the consequences of such a leader.Antigone manifests itself as direct result of the teachings of Aristotle's Poetics, in which Aristotle discusses the means by which a tragedy obtains its name. Pity and fear- the main ideas that fuel a drama, and- in this

This Essay Is About Why Gas Prices Change. It Includes Background Information On Petroleum As Well As The Way The Gas Economy Works.

1324 words - 5 pages . The balance between supply and demand is such a delicate one and controlled by people who know exactly the power they have to bring a large part of the world economy to a halt. It shows clearly not only how depended modern America is on oil, but also how dependent the world is on trade. If the oil trade was halted or altered, the entire economy would suffer. Before doing this report, I had always been a big supporter of finding alternative means