Floating interest rate

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author

Posts
May 19, 2021 at 11:11 pm #621135
Syed Ahsan Ali
Participant
- Topics: 136
- Replies: 85
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?
May 20, 2021 at 7:36 am #621167
John Moffat
Keymaster
- Topics: 57
- Replies: 54858
They 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.
Author

Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.