COST OF MONEY TEST PREP. INTEREST RATES GOING DOWN NO INFORMATION RATES WILL INCREASE LOCK UP CURRENT RATE FOR A LONG PERIOD OF TIME.

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Presentation transcript:

COST OF MONEY TEST PREP

INTEREST RATES GOING DOWN NO INFORMATION RATES WILL INCREASE LOCK UP CURRENT RATE FOR A LONG PERIOD OF TIME

TIME VALUE OF MONEY MONEY RECEIVED TODAY IS WORTH THAN MONEY RECEIVED IN THE FUTURE WHY ???

TRUTH IN LENDING ACT FEDERAL LAW COST OF CREDIT BE DISCLOSED TO CONSUMERS BOLD PRINT LOAN CONTRACT

USURY VERY HIGH RATES ON HIGH INTEREST

INFLATION WHO BENEFITS? LONG TERM FIXED RATE BORROWERS WHY ?????

CREDIT UNIONS PAY HIGHER INTEREST RATES ON SAVING ACCOUNTS NOT FOR PROFIT GOAL—CONSUMER NO SHARE HOLDERS

RULE OF DIVIDED BY INTEREST RATE YEARS TO 2X CASH 12% INTEREST 6 YRS 2X CASH

RULE OF 72 I WANT TO 2X MY CASH $10K IN 12 YEARS WHAT INTEREST RATE DO I NEED TO EARN? 72 DIVIDE BY 12 6% INTEREST

WHY MIGHT INTEREST RATES DEPRESS STOCK PRICES HIGH INTEREST RATES RESULT IN LOWER BUSINESS PROFITS HIGHER COST ON LOANS

FINANCE CHARGE THE INTEREST RATE A LENDER CHARGES TO BORROW MONEY

TIME VALUE OF MONEY WHAT IS NEEDED??? INTEREST RATE- CURRENT RATE OF INFLATION