Interest Rates Flashcards
1
Q
Do accounts held for transactional purposes earn interest?
Are they held for investment purposes?
A
Accounts held for transactional purposes generally do not earn interest + not held for investment purposes.
2
Q
How is interest paid?
A
Interest is normally paid as a % of the capital deposit.
3
Q
Name a type of account with variable interest?
Name a type of account with fixed interest?
A
Variable - Instant access
Fixed - Fixed term deposit
4
Q
When may higher rates of interest be given?
A
For larger deposits or for longer term deposits.
5
Q
What is the inverse cash rate?
A
Depositor will earn more interest by holding a capital deposit for long with a lower interest rate.
