FINANCIAL MATHEMATICS

UNIT 5. TYPES OF INTEREST RATES

identification_data

Student name(s) Oscar Salvador Guzman Sierra

Instructions:

1. Based on the reviewed materials, complete the following table with the requested information:

Element Financial Meaning Situation of the news that exemplifies it

Reference rate for They are instruments that countries use for the The financial entity may decide that the
grant loans financial decision-making, they are usually The client will pay a LIBOR rate on the credit.
used by investors to predict the five additional percentage points.
behavior of national interest rates The amount to be paid will depend on whether the rate of
the domestics. reference moves up or down
down.
Cost of financing It is given by the interest rate of the loan or of a People who have cards of
discount demanded by investors. In a credit or some type of bank credit,
bond issuance would be the placement rate of the pays interest on a reference rate
instrument. In the case of an issuance of current TIIE rate at 7.66%
actions, corresponds to the relationship existing between interest as of today, plus another

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 the contribution that the new investor will make and the percentage determined by each
utilities that you will distribute as compensation (the financial institution normally 40%,
price/utility relationship). They must be added to the that is, the interests of that card
costs associated with legal procedures, taxes, to depends on a reference rate that
placement agent and company opening (open the rod all the time, therefore, the payment
(bag) if applicable. It is important to consider the what the bank may require can increase
financing period, the bank has a period significantly in any
fixed and the issuance of shares is indefinite. moment. This also applies to credits
personal.
Short-term loans Short-term loans are a type of credit. A clear example is the payments made
which must be paid within a maximum period of one year. with credit cards in installments with no interest
On the contrary, a long-term loan has in which the loan must be settled that
a maturity longer than a year and can be paid issue the credit card.
in installments whose payment period exceeds twelve
months.
Treasury problems Excessive growth. The lack of benefits is one of the
Lack of profitability. main reasons that lead to the
Withheld funds. businesses to bankruptcy. But many
Late payments. sometimes entrepreneurs forget that
Taxes. gaining profits is not the solution of the
Unexpected payment. Treasury problems. There are businesses
Seasonality. that, even having benefits, have not been
capable of using them to solve
the most urgent payments, for which they have
forced to close.
Risk Financial risk is the probability of an event. Risk must be understood in a sense
adverse and its consequences. Financial risk expanded, including the possibility that the
refers to the likelihood of occurrence of a financial results are greater than or
event that has financial consequences lower than expected. There is the
negatives for an organization. possibility for investors to make
financial bets against the market.

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 The fact of reducing the reference rates that commercial banks use in different countries to offer to companies and to the
hogares crédito. Identificas riesgos o repercusiones ¿cuáles? Mencionen al menos 3.

The interest rates used for mortgage loans with banks that are co-signed or with a joint borrower, I consider
The interest doubles because it is the bank's interest plus the interest from the mortgage.

Currently, the government of Mexico is building a refinery, which could be said to run a minimal risk, as in the end of the
Mexico would have its own refinery and would reduce the interest rate currently paid to obtain this fuel since
the one that we currently buy when imported from the United States has a reference rate at which the price of the product increases and in
In Mexico, we pay up to double.

Nowadays in our country we face a risk regarding the privatization of essential services such as water, electricity, etc.
he rejected that proposal could have been a risk for our country since life would have become much more expensive due to the payment for a service, but now
it would be done to other companies

3. Include the bibliographic references consulted to carry out the activity in APA format.

Gabriel Baca Urbina - Marcelino Aranda, M. (2016). Financial Engineering. Chapter 2. Money Through Time and Opportunities
investment page 39, 40: Patria Editorial Group.

Abissi M.E. (February 12, 2018). What are international reference rates and why is it important to know them before purchasing a
credit in dollars? Click to see more options [PDF File]. Retrieved from
reference-rates/QIIWNSJNZFHIDENHFQPJDYLR44/story/

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 Taniamo. (February 2, 2018). What are reference rates? Click to see more options [PDF file]. Retrieved from
Unable to access external content.

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