Sir, u said in your lecture on chapter 24 Interest rate risk that floating interest rate is charged on a day-to-day basis.
Could you please explain how the bank charges a floating rate on debt borrowing?
If we have borrowed $100,000 while the floating interest rate is 5% but in a week's time it is increased to 7% how would the bank charge interest on borrowing?
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Floating interest rate
5y ago#1They would charge at the rate of 5% per year for one week, and then charge at the rate of 7% per year for the rest of the period of the loan.
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