Companies can be valued by projecting cash flow in real terms (for example, in constant 1999 dollars) and discounting this cash flow at a real discount rate (for example, the nominal rate less expected inflation). Most managers think in terms of nominal rather than real measures, so nominal measures[...]
Posts Tagged ‘loan’
September 25th, 2010 - 7:42 pm § in Discount Rates
Using Real Instead of Nominal Cash Flows and Discount Rates
November 16th, 2009 - 8:42 am § in Interest Rate Swaps
Interest Rate Swaps
Interest rate swaps are simply a form of multiple period FRAs. The term of the agreements may be a matter of many months or even years. As is the case with FRAs there is no exchange of principal. The netting effect disguises the true nature of this transaction. The duration of an asset or liability [...]