what is the difference between flat rate and diminishing rate?
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A flat interest rate means that the amount of interest paid is fixed and does not reduce as time moves on. ... The reducing interest rate on the other hand means that as a payment is made on the principal amount of a loan, the interest payment reduces as well.
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The difference between the real and nominal interest rate is that the real interest rate is approximately equal to the nominal interest rate minus the expected rate of inflation. The nominal interest rate in the interest rate before inflation has been accounted for and removed from the number.
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The annual interest rate typically quoted on loans or investments is the nominal interest rate—the periodic rate before compounding has been taken into account. The effective interest rate is the actual interest rate after the effects of compounding have been included in the calculation.
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Diminishing marginal returns is an effect of increasing input in the short run while at least one production variable is kept constant, such as labor or capital. Returns to scale is an effect of increasing input in all variables of production in the long run.
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What's the difference between fixed and variable rates? With a fixed rate mortgage, the mortgage rate and payment you make each month will stay the same for the term of your mortgage . With a variable rate mortgage, however, the mortgage rate will change with the prime lending rate as set by your lender.
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What is the difference between level term and decreasing term life insurance? Level term life insurance is a fixed payment upon death, for a fixed period. ... A decreasing term policy does exactly that, it decreases in value over the term of the policy.
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The difference is that a rate is a comparison of two numbers with different units, whereas a ratio compares two numbers with the same unit. For example, in a room full of students, there are 10 boys and 5 girls.
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Whereas, Discount Rate is the interest rate that the Federal Reserve Banks charges to the depository institutions and to commercial banks on its overnight loans. ... Whereas the calculation of Discount rate is complex- Determining the present value of the future cash flows in the discounted cash flow analysis.
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Timing Differences The straight-line method depreciates an asset by an equal amount each accounting period. The double-declining-balance method allocates a greater amount of depreciation in the earlier years of an asset's life than in the later years.
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The relationship between interest rates and the quantity of loan supplied is proportional. With higher interest theirs a higher number of loans supplies, and with lower interest less are supplied.
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Usually, marginal substitution is diminishing, meaning a consumer chooses the substitute in place of another good rather than simultaneously consuming more. The law of diminishing marginal rates of substitution states that MRS decreases as one moves down a standard convex-shaped curve, which is the indifference curve.
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Effective interest rate is the one which caters the compounding periods during a payment plan. ... The nominal interest rate is the periodic interest rate times the number of periods per year. For example, a nominal annual interest rate of 12% based on monthly compounding means a 1% interest rate per month (compounded).
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Nominal interest rate is also defined as a stated interest rate. ... Effective interest rate is the one which caters the compounding periods during a payment plan. It is used to compare the annual interest between loans with different compounding periods like week, month, year etc.
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An interest rate takes two forms: nominal interest rate and effective interest rate. The nominal interest rate does not take into account the compounding period. The effective interest rate does take the compounding period into account and thus is a more accurate measure of interest charges.
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With a fixed rate, whether market prices go up or down, yours will remain the same. With a capped rate, prices will change in line with the market, but will not go over a set limit. So if market prices go down, your rate will go down, but if market prices go up, your rate will not rise above the cap.
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The difference between the two rates is known as the Cash-Spot rate or Cash-Spot difference. This is lower than the Spot Rate, but higher than the Cash Rate. ... In simpler terms: Spot Date = Trade Date + 2 working days. Cash Rate = Spot Rate minus Cash-Spot Difference.
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The difference between Decrease and Increase. When used as nouns, decrease means an amount by which a quantity is decreased, whereas increase means an amount by which a quantity is increased. ... Of a quantity, to become smaller.