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How to Answer the Most Common Questions in a Corporate Finance Interview

What is reason behind company Issue Rights?

A company may issue rights to its existing shareholders as a way to raise additional capital without issuing new shares. This is often done by offering existing shareholders the opportunity to purchase new shares at a discounted price before they are made available to the general public. This can help the company raise capital quickly, while also allowing existing shareholders to maintain their percentage ownership in the company. Additionally, issuing rights can help a company to avoid diluting the value of existing shares.


What is a clean and dirty price of a bond?

A clean bond price is the price of the bond without considering the interest that has accrued since the previous coupon payment. In contrast, a dirty bond price is the price of the bond that includes the interest that has accrued since the previous coupon payment.


For example, if a bond has a face value of $1,000, a coupon rate of 5%, and a current market price of $1,050, the clean price would be $1,050, and the dirty price would be slightly higher, since it would also include the interest that has accrued since the last coupon payment.


In the bond market, investors generally quote and trade bonds on a clean price basis, while the coupon payments are calculated on a dirty price basis.


Define Corporate Finance and why corporate finance is important?

Corporate finance is the area of finance that deals with the financial decisions of companies, including how to raise capital, how to invest that capital, and how to manage risk. Corporate finance professionals are responsible for analyzing financial data and making recommendations to company management on how to best allocate financial resources.

Corporate finance is important for companies because it helps them to make informed decisions about how to raise and invest capital in order to achieve their goals. This can include decisions about issuing stock or bonds, acquiring other companies, investing in new projects, or expanding into new markets. By making smart financial decisions, companies can increase their chances of success and achieve long-term growth.

Additionally, corporate finance is important for investors as it helps them to understand a company's financial health and future prospects, so that they can make informed decisions about whether to invest in the company.

Moreover, corporate finance plays a crucial role in making a company financially stable, sustainable and profitable, which in turn contributes to the overall economic development of a country.


What are the main responsibilities of Finance manager?

The main responsibilities of a finance manager include:

  1. Financial Planning and Analysis: The finance manager is responsible for creating financial plans and budgets to guide the company's financial decisions and ensure they align with the company's overall strategy.

  2. Financial Reporting: The finance manager is responsible for preparing and analyzing financial reports, such as income statements, balance sheets, and cash flow statements, to provide insight into the company's financial performance.

  3. Risk Management: The finance manager is responsible for identifying and assessing potential risks to the company's financial health and implementing strategies to mitigate those risks.

  4. Investment Planning: The finance manager is responsible for evaluating and recommending investments in projects or new ventures that align with the company's overall strategy.

  5. Treasury Management: The finance manager is responsible for managing the company's cash flow, including forecasting cash needs, managing bank accounts, and ensuring that the company has enough cash on hand to meet its financial obligations.

  6. Compliance: The finance manager is responsible for ensuring the company's financial activities comply with legal and regulatory requirements.

  7. Financial forecasting: The finance manager forecasts the future financial performance of the company and provides insights and recommendations to the management team.

  8. Cost control: The finance manager is responsible for controlling the company's costs and ensuring that it operates efficiently.

  9. Strategic Planning: The finance manager provides financial input and insight into the company's strategic plans, ensuring that they are viable and financially sound.

  10. Business partnering: The finance manager provides financial guidance and support to other departments and works closely with them to identify and evaluate new business opportunities.


What do you mean by Finance in your own term?

In my own terms, finance is the management of money and resources to achieve an individual or organization's goals. It includes the process of planning, organizing, directing, and controlling the monetary resources of an entity in order to achieve financial stability, sustainability, and growth. Finance also involves making decisions about how to raise, invest, and manage money, as well as evaluating and mitigating financial risk. It encompasses a wide range of activities, from creating financial plans and budgets, to forecasting future financial performance, to managing investments and cash flow, to ensuring compliance with legal and regulatory requirements. Overall, finance is a critical function that helps individuals and organizations achieve their objectives by providing the necessary financial resources and support.


What are the main disadvantages of Limited Capacity of Individual in proprietary firms?

A proprietary firm, also known as a sole proprietorship, is a type of business owned and operated by one individual. The main disadvantage of a proprietary firm is that the capacity of the individual owner is limited in several ways:

  1. Limited Financial Resources: The owner of a proprietary firm is personally liable for the debts of the business and may not have the financial resources to support large investments or take on significant debt.

  2. Limited Management Capabilities: The owner of a proprietary firm is typically responsible for all aspects of the business, from managing daily operations to making strategic decisions. This can be overwhelming, and the owner may not have the skills or experience to effectively manage the business.

  3. Limited Ability to Raise Capital: Proprietary firms have limited ability to raise capital, and they cannot issue stocks or bonds like corporations. This makes it harder for them to expand or invest in new projects.

  4. Limited Growth Potential: Because the owner is the only person involved in the business, there is a limit to how much the business can grow. The owner may not have the time or resources to take on additional staff, and the business may struggle to keep up with demand as it grows.

  5. Limited Liability Protection: In a proprietary firm, the owner is personally liable for the debts of the business. This means that the owner's personal assets, such as their home, car, or savings, are at risk if the business cannot pay its debts.

  6. Limited Continuity: A proprietary firm is dependent on the owner, if the owner is unable to continue running the business, the firm may have to close down, as there is no legal provision for a successor.

  7. Limited Reputation: A proprietary firm may have a limited reputation, as it has no separate legal identity. This can make it difficult for the firm to establish a strong brand or gain the trust of customers and suppliers.


Tell me the main disadvantages of Higher Taxes in proprietary firms?

The main disadvantages of higher taxes in proprietary firms include:

  1. Reduced Profitability: Higher taxes can eat into a proprietary firm's profits, leaving less money for the owner to reinvest in the business or take as income.

  2. Reduced Competitiveness: Higher taxes can make it harder for a proprietary firm to compete with other businesses, as it may have to charge higher prices or offer fewer services to cover the additional costs.

  3. Reduced Incentive to Invest: Higher taxes may reduce the incentive for the owner of a proprietary firm to invest in new projects or expand the business, as they will see a smaller return on their investment after taxes.

  4. Reduced Capital: Higher taxes can reduce the amount of capital available to a proprietary firm, making it harder for the business to finance new projects or expand.

  5. Reduced Growth Potential: Higher taxes can limit the growth potential of a proprietary firm, as the owner may not have the financial resources to expand the business or invest in new projects.

  6. Reduced Employee Retention: The owner may not be able to afford to pay employees as much as larger firms, which can lead to difficulty in retaining employees.

  7. Reduced Flexibility: Higher taxes can make it harder for a proprietary firm to respond to changes in the market or adapt to new opportunities, as the business may not have the resources to do so.

Overall, the impact of higher taxes on proprietary firms is that it can negatively affect their profitability, competitiveness and ability to grow, which in turn can affect their sustainability and long-term success.


Which are the main interrelated areas Finance consists of?

Finance consists of several interrelated areas, including:

  1. Corporate Finance: This area of finance deals with the financial decisions of companies, including how to raise capital, how to invest that capital, and how to manage risk.

  2. Investment Management: This area of finance deals with the management of investments, including the selection of securities and the management of portfolios.

  3. Risk Management: This area of finance deals with identifying and assessing potential risks to an organization's financial health and implementing strategies to mitigate those risks.

  4. Financial Markets: This area of finance deals with the study of financial markets, including the stock market, bond market, and foreign exchange market.

  5. Financial Accounting: This area of finance deals with the preparation and analysis of financial statements, such as income statements and balance sheets.

  6. Financial Planning and Analysis: This area of finance deals with creating financial plans and budgets to guide an organization's financial decisions and ensure they align with the organization's overall strategy.

  7. Financial Economics: This area of finance deals with the application of economic principles to the study of financial markets and institutions.

  8. International finance: This area of finance deals with the financial transactions that occur between countries, including foreign exchange rates, trade balances, and international investments.

  9. Behavioral finance: This area of finance studies how psychological and emotional factors influence financial decision making

All these areas are interrelated as they have a direct or indirect impact on each other and are critical for making sound financial decisions and achieving financial stability and growth.


What is Financial Management?

Financial management refers to the process of planning, organizing, directing, and controlling the monetary resources of an organization in order to achieve its financial goals. It includes activities such as creating financial plans and budgets, forecasting future financial performance, managing investments and cash flow, and ensuring compliance with legal and regulatory requirements.

The main objectives of financial management are to:

  1. Ensure the financial stability and sustainability of the organization.

  2. Maximize shareholder wealth.

  3. Generate adequate returns on investment.

  4. Ensure availability of funds for working capital and capital expenditure.

  5. Optimize the use of funds.

Financial management is a critical function that helps organizations make informed decisions about how to raise and invest capital in order to achieve their goals. It also involves assessing and mitigating financial risk, and evaluating investment opportunities. A well-functioning financial management system is critical for an organization's long-term success and growth.

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What is Bank Overdraft?

A bank overdraft occurs when an individual or organization withdraws more money from a bank account than they have available in the account. This can happen when an account holder writes a check for more money than they have in the account, or when they use a debit card to make a purchase that exceeds the available balance.

When an account holder overdrafts their account, the bank may choose to cover the shortfall and charge a fee for the service, or it may choose to return the transaction as unpaid and charge a fee for the insufficient funds. Some banks also offer overdraft protection, which allows account holders to link their checking account to a savings account, credit card or line of credit, so that if they overspend in the checking account, the bank will automatically transfer money from the linked account to cover the shortfall.

An overdraft can be helpful in case of a temporary shortage of funds, but it is important to be aware of the fees and interest charged for this service, and to use it responsibly. An overdraft can quickly become expensive if it's not paid back in time, and if it's used frequently it can be an indication of overspending or financial instability.





What is the Profitability ratios?

Profitability ratios are a group of financial metrics that measure a company's ability to generate profits from its operations. These ratios provide insight into a company's profitability and efficiency and are used to evaluate the company's performance over time. Some of the common profitability ratios include:

  1. Gross profit margin: measures the percentage of revenue that remains after deducting the cost of goods sold (COGS). It is calculated by dividing gross profit by revenue.

  2. Operating profit margin: measures the percentage of revenue that remains after deducting operating expenses. It is calculated by dividing operating profit by revenue.

  3. Net profit margin: measures the percentage of revenue that remains after deducting all expenses, including COGS, operating expenses, and taxes. It is calculated by dividing net profit by revenue.

  4. Return on assets (ROA): measures how much profit a company generates for every dollar of assets it holds. It is calculated by dividing net income by total assets.

  5. Return on equity (ROE): measures how much profit a company generates for every dollar of shareholder's equity. It is calculated by dividing net income by shareholder's equity.

  6. Return on investment (ROI): measures how much profit a company generates for every dollar of investment. It is calculated by dividing net income by total investment.

Profitability ratios are useful for comparing a company's performance to industry averages or to its own historical performance. They help to identify trends and patterns, and can indicate areas where a company may need to improve its operations in order to increase profitability.


Define the Cash System of Accounting? Define Capital Expenditure?

Cash system of accounting, also known as cash basis accounting, is a method of accounting in which income and expenses are recorded when cash is received or paid out. Under the cash system of accounting, revenue is recognized when cash is received, and expenses are recognized when cash is paid out. This is different from the accrual system of accounting, in which revenue is recognized when it is earned, and expenses are recognized when they are incurred, regardless of when cash is received or paid out.

Capital expenditure, also known as Capex, is the money that a company spends on acquiring or upgrading physical assets such as property, equipment, or technology. These are long-term investments that a company expects to generate revenue over an extended period of time. Capital expenditures are recorded as assets on the balance sheet, and the value of these assets is then depreciated over time.

In summary, cash system of accounting is a method of accounting that records financial transactions when cash is received or paid out, while capital expenditure is a long-term investment in physical assets that generates revenue over an extended period of time.


Described Mercantile or Accrual System of Accounting?

The Mercantile or Accrual system of accounting, is a method of accounting in which financial transactions are recorded when they occur, regardless of when cash is received or paid out. This system is based on the accrual principle, which states that revenues and expenses should be recognized when they are earned or incurred, regardless of when payment is received or made.

Under this system, revenue is recognized when it is earned, such as when a product is sold or a service is rendered, and expenses are recognized when they are incurred, such as when a bill is received or a product is purchased. This provides a more accurate picture of a company's financial performance, as it includes all transactions that have occurred, rather than just those that involve cash.

The Mercantile or Accrual system of accounting is more widely used and accepted by most companies worldwide. It is more suitable for large companies with many transactions and a lot of credit sales, it also provides a more comprehensive view of a company's financial performance over time. It also helps to meet the legal and tax requirements.


Define Share Capital?

Share capital, also known as equity capital or stock capital, is the money that a company raises by issuing shares of stock to investors. When a company issues shares of stock, it is selling a small piece of ownership in the company to the public. The money that investors pay for the shares becomes part of the company's share capital.

Share capital can be divided into two types:

  1. Authorized share capital: refers to the maximum number of shares that a company is allowed to issue as stated in its articles of association or incorporation. It is the maximum amount of shares that the company can issue, but it doesn't mean that the company needs to issue all of them.

  2. Issued share capital: refers to the actual number of shares that a company has issued to investors. It is the number of shares that have been sold to the public.

Share capital is an important source of financing for companies, as it allows them to raise capital without incurring debt. Shareholders are entitled to a portion of the company's profits, in the form of dividends, and they also have a say in the company's management through voting rights.

Share capital is also important for the valuation of a company, as the market value of a company's shares is determined by the number of shares outstanding multiplied by the market price per share.

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Where do you see yourself in five years?

In five years, I see myself continuing to grow and develop as a professional in the corporate finance field. My goal is to gain more knowledge and experience in the field and to eventually take on a leadership role in a finance team. I'm committed to working hard, learning new skills and taking on new challenges in order to further my career and reach my goals.


How you will handle the pressure with your team?

When I am working in a team, I make sure to communicate regularly with all my team members to keep everyone on the same page and ensure that everyone is aware of their roles and responsibilities. I also make sure to stay organized and delegate tasks accordingly. I also make sure to take a step back and look at the bigger picture to help the team focus on the goal. Additionally, I make sure to be open to feedback and constructive criticism, as this allows us to work together better and more efficiently.


What are the different types of Bonds?

There are several different types of bonds, each with its own characteristics and risks. Some of the most common types include:

  1. Government Bonds: These are bonds issued by national governments or federal agencies. They are considered to be among the safest investments as the issuer has the ability to tax its citizens to pay off its debt.

  2. Corporate Bonds: These are bonds issued by corporations. They tend to have higher yields than government bonds but also have higher risk as the issuer is a company rather than a government.

  3. Treasury Bonds: These are long-term debt securities issued by the U.S. Department of the Treasury. They have maturities of more than 10 years and pay interest to bondholders every six months until maturity.

  4. Treasury Inflation-Protected Securities (TIPS): These are bonds issued by the U.S. Department of the Treasury. They are similar to Treasury bonds, but they are adjusted for inflation, so the face value of the bond increases with inflation, and the interest payments also increase.

  5. Zero-coupon Bonds: These are bonds that are sold at a deep discount to face value and do not make regular interest payments. Instead, the bond's value increases over time, and the bondholder receives the face value of the bond when it matures.

  6. Floating Rate Bonds: These are bonds that have variable interest rates. The interest rate on these bonds changes periodically, usually in response to changes in a benchmark interest


What is a securitized Bond? What’s pushdown accounting?

A securitized bond is a financial instrument that is created by pooling together multiple assets, such as mortgages, car loans, or credit card receivables, and then issuing bonds that are backed by the cash flows generated by these assets. The bonds are divided into tranches, or slices, each with its own level of risk and return. Securitized bonds allow investors to gain exposure to a diversified pool of assets, while also providing a way for the original asset holders to raise capital.

Pushdown accounting is a method of accounting that is used when a parent company acquires a subsidiary and the parent company wants to reflect the subsidiary's financial statements in its own financial statements. Under pushdown accounting, the subsidiary's historical cost basis is replaced with the parent company's purchase price, and the subsidiary's financial statements are consolidated with the parent company's financial statements. This method is used to ensure that the parent company's financial statements accurately reflect the value of the subsidiary and the nature of the business combination.

In simple terms, securitization is a process of pooling together different assets and issuing bonds against them, while pushdown accounting is a method of accounting that is used when a parent company acquires a subsidiary and wants to reflect the subsidiary's financial statements in its own financial statements.


Who would you say is the most influential government official vis a vis the company?

That depends on the particular company, as each company's situation is unique. Generally speaking, the most influential government official when it comes to a company's finances is the Finance Minister or the head of the Ministry of Finance. The Finance Minister is responsible for setting the government's financial policies, including taxation and budgeting, and for overseeing the execution of these policies. The Finance Minister can also influence a company's operations through regulations and taxation, and therefore has a powerful influence over the company's financial performance.


Explain me different types of EPS ?

EPS, or Earnings per Share, is a financial ratio that measures the amount of profit a company generates for each share of its common stock. There are several different types of EPS that are used to evaluate a company's performance, including:

  1. Basic EPS: This is the most common type of EPS and it is calculated by dividing a company's net income by the number of outstanding shares of common stock. It provides a basic measure of a company's profitability.

  2. Diluted EPS: This type of EPS takes into account the potential dilution of a company's earnings due to the conversion of outstanding convertible securities, such as options and warrants, into shares of common stock. It provides a more conservative measure of a company's profitability.

  3. Trailing EPS: This type of EPS is calculated using the company's net income for the most recent four quarters. It provides a measure of a company's profitability over the last year.

  4. Forward EPS: This type of EPS is calculated using the company's projected earnings for the next four quarters. It provides an estimate of a company's future profitability.

  5. Core EPS: This type of EPS is calculated by adjusting the basic EPS for one-time or non-recurring items that are not considered to be part of the company's core operations. It provides a measure of a company's underlying profitability.

Each type of EPS can provide different information and perspective on a company's profitability, and they are used in different context to evaluate a company's performance.





Tell me the main difference between Futures Contract and Forwards Contract?

Futures contracts and forward contracts are both agreements to buy or sell an asset at a specific date in the future at a pre-determined price, but there are some key differences between the two.

  1. Standardization: Futures contracts are standardized agreements that are traded on organized exchanges. They have a set expiration date, quantity, and quality of the underlying asset, and a standard settlement procedure. Forward contracts, on the other hand, are customized agreements that are traded over the counter and can have a wide range of terms and conditions.

  2. Margin requirements: Futures contracts require traders to post margin, which is a small percentage of the total contract value, to ensure that they can meet their obligations under the contract. Forward contracts do not require traders to post margin.

  3. Liquidity: Futures contracts are traded on organized exchanges, which means that there is a large number of buyers and sellers, making them more liquid than forward contracts which are traded over the counter.

  4. Regulation: Futures contracts are regulated by government agencies such as the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), while forward contracts are not regulated.

  5. Credit Risk: Forward contracts involve a direct relationship between the two parties, so if one party defaults on the contract, the other party is at risk. Futures contracts, on the other hand, are settled through a clearinghouse, which acts as a counterparty to both parties, so the credit risk is spread among all the participants in the market.

In summary, futures contracts are standardized and regulated agreements that are traded on organized exchanges, while forward contracts are customized agreements that are traded over the counter. Futures contracts are more liquid and have lower credit risk but require margin while forward contracts are less regulated and have no margin requirements but have higher credit risk.


Explain me the components of WACC (weighted average cost of capital)?

The components of Weighted Average Cost of Capital (WACC) include a company's equity, debt and tax rate. Equity refers to common and preferred stock. Debt includes loans and bonds. We then weigh each of these components proportionately to arrive at the company's WACC. The formula for WACC is: WACC = (Re x E) + (Rd x (1-T) x D) / (E + D) Where Re is the total cost of equity, Rd is the total cost of debt, E is the market value of total equity, D is the market value of total debt, V is the total market value of financing and T is the effective tax rate.


Tell me how to build DCF (discounted cash flow).

The discounted cash flow (DCF) method is a widely used valuation technique that calculates the present value of a company's future cash flows. The basic steps for building a DCF model are as follows:

  1. Estimate future cash flows: The first step is to estimate the future cash flows that the company is expected to generate. This includes forecasting revenue, expenses, and capital expenditures over a specific period of time.

  2. Determine the discount rate: The next step is to determine the discount rate, also known as the required rate of return or the cost of capital, which is the rate of return that investors require to invest in the company. The discount rate is used to calculate the present value of the future cash flows.

  3. Calculate the present value of future cash flows: Using the future cash flows and discount rate, calculate the present value of the future cash flows. This is done by dividing each future cash flow by (1+discount rate)^n, where n is the number of years into the future that the cash flow is projected.

  4. Sum the present value of future cash flows: Sum the present value of all the future cash flows to arrive at the total present value of the company's cash flows.

  5. Subtract the initial investment: Subtract the initial investment, such as the cost of purchasing the company or the cost of building the project, from the total present value of the company's cash flows to arrive at the net present value (NPV).

  6. Interpreting the result: The net present value (NPV) is the difference between the present value of the cash inflows and the present value of the cash outflows. A positive NPV indicates that the investment is expected to generate a return greater than the required rate of return and is considered a good investment.

It is important to note that building a DCF model requires a number of assumptions and estimates, so it's important to be realistic and conservative when forecasting future cash flows and determining the discount rate. Also, the model can be sensitive to changes in key inputs, so sensitivity analysis is often performed to evaluate the impact of changes in these inputs on the overall result.


Explain me how to link Income statement to cashflow statement?

To link the income statement to the cash flow statement, focus on net income (also known as the “bottom-line” number). Net income is calculated by subtracting total expenses from total revenue. To calculate cash flow from operations, depreciation needs to be added back to net income. Depreciation is recognized on the balance sheet under the asset section. The statement of cash flows is then used to determine the beginning and ending balance sheet amounts of cash and cash equivalents. To calculate the cash flow statement, you can use either the direct or indirect method. The direct method uses actual cash inflows and outflows from the company's operations, and the indirect method uses the Profit and Loss statement and balance sheet as a starting point.


Explain me process how would you valuing a privately held company?

Valuing a privately held company is different from valuing a publicly-traded company as private companies don't report their financials publicly. There are a few methods used to value private companies, such as the comparable company analysis approach, which involves looking for similar public companies and using their data to estimate the value of the private company. Other methods include the EBITDA or enterprise value multiple and the discounted cash flow method. The discounted cash flow method requires estimating the revenue growth of the target firm by averaging the revenue growth rates of similar companies. All calculations are based on assumptions and estimations, and may not be accurate. Additionally, private companies may need to sell part of the ownership in the company to raise capital and investors must be able to estimate the firm's value before making an investment decision.


Tell me a reason why technology company more highly valued in the market (P/E) than a steel company stock?

Technology companies are often valued more highly in the market than steel companies because they typically have higher growth potential and more predictable revenue streams. Technology companies are often able to scale their businesses quickly and have a larger addressable market, which can lead to higher profits and revenue growth. Additionally, technology companies often have a strong competitive advantage, such as proprietary technology or a strong brand, which can make them more attractive to investors. In contrast, steel companies typically have more limited growth potential and face more competition, which can make them less attractive to investors.


Tell me about NPV and IRR?

Net Present Value (NPV) and Internal Rate of Return (IRR) are both financial metrics used to evaluate the profitability of an investment.

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. The NPV is used to determine the value of an investment by calculating the present value of future cash flows and comparing it to the initial investment. A positive NPV indicates that the investment is expected to generate more cash flow than the initial investment, making it a good investment. A negative NPV indicates that the investment is expected to generate less cash flow than the initial investment, making it a bad investment.

Internal Rate of Return (IRR) is a metric that measures the rate at which the NPV of an investment equals zero. It is used to determine the profitability of an investment by calculating the annualized rate of return. A higher IRR indicates a more profitable investment, while a lower IRR indicates a less profitable investment. IRR is typically expressed as a percentage. IRR is a popular metric because it is easy to understand and allows for direct comparison of investments with different cash flows, durations and costs.

Both NPV and IRR are important in evaluating the profitability of an investment. IRR is a measure of profitability and NPV is a measure of value. IRR can be used to compare investments with different cash flow patterns, but it does not consider the absolute value of the investment. NPV, on the other hand, compares the value of the investment to the cost of the investment, but it does not take into account the timing of cash flows.


What is crossover

Crossover Rate is the cost of capital (CoC) of two mutually exclusive projects at which their NPVs (net present values) are equal. NPV stands for Net Present Value and is a common metric used in capital budgeting to determine the value of a project. It is the sum of all future cash flows discounted to the present value. IRR stands for Internal Rate of Return and is another metric used in capital budgeting to determine the profitability of a project. It is the discount rate that equates the project's net present value to zero.


When you see upward sloping than what does it mean?

An upward sloping yield curve suggests that financial markets expect short-term interest rates to rise in the future. This occurs because when the price of a good increases, the demand for it also increases, causing the supply curve to slope upwards. The “Normal” yield curve has an upward slope, indicating that bonds with a longer maturity date have a higher yield than shorter-term bonds. This is the most common shape because it represents the expected shift in yields as maturity dates extend out in time and is most commonly associated with positive economic growth.


Just see today interest rates and what going to happen with interest rates in next 6 months?

Currently, the average 30-year fixed rate mortgage is 6.15% as of January 19, 2021. Kiplinger's Interest Rates Outlook forecasts the Federal Reserve's next move and the direction of interest rates for the next six months. The I-Bond Rate is forecasted to remain at 6.89% for the next six months. Bankrate also forecasts that higher interest rates are here to stay but the biggest increases may be over. It is likely that mortgage interest rates will remain in the 6% - 7% range depending on daily movements in the bond market, the property type, and your personal financial situation.




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