Interest Rates in Establishing Commodity Prices

Related BrainMass Solutions

• Role of interest rates in establishing commodity prices

  170897 Role of interest rates in establishing commodity prices 20. The following prices are observed. Formulate an arbitrage strategy to profit from the situation. ? Wheat is $2.00 per bushel spot and $2.03 per bushel for 180-day futures. ?

• Stock Market Crashes of 1987 and 1989

  Interesting, the drop in interest rates that coincided with the collapse in energy prices at the end of 1985 helped create the commodity price rise through 1987 and 1988 that helped drive interest rates and stock prices into the stock market crash.

• futures market

  These results can lead to reductions in prices and interest rates paid by consumers.

• Demonstrate, using supply and demand analysis, the impact on the equilibrium price and quantity of new Hybrid automobiles when the following occurs

  Interest Rates Decrease So, a decrease in interest rates has a few effects. Firstly, it should result in cheaper financing costs and lead to an increase in unemployment.

• Exchange Rate Fluctuations: Causes and Impacts

  Changes in Commodity prices over the last month = +8.7% a.

• Risk in investing in financial markets

  Bond prices are inversely related to interest rate- a rise in interest causes a fall in bond price and vice versa. Monetary authorities like the Federal Reserve affect the interest rates while pursuing their monetary policies.

• Derivatives as a risk management tool

  According to Keown et al. (2002), futures (also termed as futures contacts) may be used to lock in the following: 1. prices of commodities and raw materials that are used in production, 2. interest rates on debt, and 3.

• The U.S. Federal Bank

  Some effects are an increase in net exports, reduced international purchasing power, increasing commodity prices, and upward pressure on interest rates.

• Macro discussion questions

  In the same way, when interest rates increase consumers and businesses curtail their activities and the economy slows down. 4. The exchange rate reflects the demand for a currency.