what are the effects of interest rates on economy as a whole.Specially in forex market
Effects of Interest Rates - what are the consequences of interest rates
(2 posts) (2 voices)-
Posted 2 years ago #
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well there are many roles played by intrest rates if it is increased there will be less money in the market and the speed of equity bull market gets a brake.It increases the cost of borrowing.In Forex increase in interest rates will drive up call premiums and cause put premiums to decrease.
Check this
"Interest rates are the critical factor in determining whether to exercise a put option early. A stock put option becomes an early exercise candidate anytime the interest that could be earned on the proceeds from the sale of the stock at the strike price is large enough. Determining exactly when this happens is difficult, since each individual has different opportunity costs, but it does mean that early exercise for a stock put option can be optimal at any time provided the interest earned becomes sufficiently great."
Posted 2 years ago #
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