Posted by Michael Morrongiello on May 01, 2004 at 23:19:38:
In Reply to: If the fed raises rates 1%, how big is the impact on my note? posted by David on April 27, 2004 at 09:59:46:
The short answer is YES, as interest rates rise in the marketplace the PRESENT VALUE of long term debt diminishes because investors can park their cash into other investments that may produce higher rates of return.
A 1% move in long term rates may not result in a dramatic difference in what you can sell your Note for today as oppose to if you sold if AFTER the 1% move upward, but it most definintely WILL have some impact.
The cash value of a Long term debt instrumetn (your Note) is simply worth LESS as rates rise.
- Re: YES there will be an impact Jessie Caswell 01:12:34 8/11/2004 (0)
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