Financial instruments and interest rates are crucial in financial management, impacting decision-making. Instruments like debt and equity represent monetary value, while interest rates, influenced by central banks, determine borrowing costs and returns on investment. In business, interest rates affect the cost of capital, influencing affordability for operations and expansion. They also impact the valuation of bonds and indirectly influence stock prices. Financial instruments, including derivatives, are used for risk management, with interest rates influencing their pricing. Understanding this relationship is vital for making informed financial decisions and optimizing resource allocation in a dynamic economic landscape.
How to Calculate it?
