contract rate

Examples of contract rate in the following topics:

• Bond Valuation Method

  • Whether the amount the business will receive equals its face value depends on the difference between the bond's contract rate and the market rate of interest at the time the bond is issued .
  • The bond's contract rate is another term for the bond's coupon rate.
  • Regardless of what the contract and market rates are, the business must always report a bond payable liability equal to the face value of the bonds issued.
  • If the market rate is less than the coupon rate, the bonds will probably be sold for an amount greater than the bonds' value.
  • The discount rate for both the principal and interest payment components is the market rate when the bond was issued.

• Spot Rates, Forward Rates, and Cross Rates

  • Spot & forward rates are settlement prices of spot & forward contracts; cross rates are the exchange rate between two unofficial currencies.
  • In finance, a spot contract, spot transaction, or simply "spot," is a contract of buying or selling a commodity, security, or currency for settlement (payment and delivery) on the spot date, which is normally two business days after the trade date.
  • A spot contract is in contrast with a forward contract where contract terms are agreed now but delivery and payment will occur at a future date.
  • The settlement price of a forward contract is called a "forward price" or "forward rate. " Depending on the item being traded, spot prices can indicate market expectations of future price movements.
  • In other words, spot rates can be used to calculate forward rates.

• Uses of Derivatives to Manage Exposure

  • However, there is still the risk that no wheat will be available because of events unspecified by the contract, such as the weather, or that one party will renege on the contract.
  • The rate of interest on the loan resets every six months.
  • The corporation could buy a forward rate agreement (FRA), which is a contract to pay a fixed rate of interest six months after purchases on a notional amount of money.
  • If the interest rate after six months is above the contract rate, the seller will pay the difference to the corporation, or FRA buyer.
  • If the rate is lower, the corporation will pay the difference to the seller.

• Futures and Forward Contracts

  • If the interest rate falls, the derivatives contract guarantees you a 10% return, protecting your fund.
  • Futures and forward contracts can reduce exchange rate risk.
  • A Malaysian bank issued a derivatives contract that specifies the exchange rate as $1 = 3 ringgits.
  • Unfortunately, Exxon has U.S. dollars, and it contracted to pay a lower exchange rate.
  • In this case, Exxon benefits from the exchange rate because its ringgit contract has appreciated.

• Interest Rate Parity Theorem

  • Investors use Interest Rate Parity Theorem to price forward contracts.
  • A forward contract's price originates from interest rate difference between countries.
  • We can examine price derivatives contracts and predict future exchange rates.
  • Thus, the investor locks into a forward contract today for a fixed exchange rate protecting the investor from the exchange rate risk.
  • Spot exchange rate is $0.0127 per yen while a one-year forward contract equals $0.0120 per yen.

• Electrical Events

  • The SA and AV nodes initiate the electrical impulses that cause contraction within the atria and ventricles of the heart.
  • The SA node impulses also travel to the AV node, which stimulates ventricular contraction.
  • The normal firing rate in the AV node is lower compared to the SA node because it slows the rate of neural impulses.
  • Without autonomic nervous stimulation, it sets the rate of ventricular contraction at 40-60 bpm.
  • Sympathetic nervous stimulation will still increase heart rate, while parasympathetic nervous stimulation will decrease heart rate, by acting on AV node.

• Special Derivatives

  • Second, investors rarely buy CDS contracts for bonds or other debt from financially strong companies with AAA ratings.
  • During good times, AAA rated companies have a zero default rate while speculative grade bonds have a default rating less than 4%.
  • However, during the 2001 Recession, AAA rated companies still had close to a zero default rate while the default rate soared to 10% for speculative investments.
  • A company can stack CDS contracts upon other CDS contracts.
  • Commercial and investment bankers used CDS contracts to guarantee an AAA rating for Collateralized Debt Obligations, which contained securities tied to the mortgage market.

• Cardiac Cycle

  • The cardiac cycle describes the phases of contraction and relaxation of the heart that drive blood flow throughout the body.
  • Heart rate is a term used to describe the frequency of the cardiac cycle.
  • Resting heart rates can be significantly lower in athletes, and significantly higher in the obese.
  • Exercise, environmental stressors or psychological stress can cause the heart rate to increase above the resting rate.
  • Atrial Systole- the contraction of the atria that causes ventricular filling.

• Overview of Derivatives

  • The most common underlying assets include commodities, stocks, bonds, interest rates, and currencies.
  • Products such as swaps, forward rate agreements, exotic options - and other exotic derivatives - are almost always traded in this way.
  • A futures contract differs from a forward contract in that the futures contract is a standardized contract written by a clearing house that operates an exchange where the contract can be bought and sold.
  • On the other hand, the forward contract is a non-standardized contract written by the parties themselves.
  • Usually at the time when the contract is initiated at least one of these series of cash flows is determined by a random or uncertain variable such as an interest rate, foreign exchange rate, equity price or commodity price.

• Velocity and Duration of Muscle Contraction

  • Skeletal muscle contractions can be broadly separated into twitch and tetanic contractions.
  • In a twitch contraction, a short burst of stimulation causes the muscle to contract, but the duration is so brief that the muscle begins relaxing before reaching peak force.
  • However, cross-bridge formation is not immediate and if myofilaments slide over each other at a faster rate, their ability to form cross-bridges and subsequent force are both reduced.
  • Twitch contractions are short in duration.
  • Tetanic contractions, which are long in duration, reach peak force and plateau.