Rating outlook and Real: Difference between pages

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imported>Doug Williamson
(Add link to Credit rating agency.)
 
imported>Doug Williamson
m (Show the real rate as expressly +2%, with a + sign.)
 
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A formal indication by a credit rating agency that it anticipates a change in a particular credit rating at some time in the foreseeable future.
1.
 
A term which has been restated to exclude the effects of inflation. 
 
For example, if £100 is invested for a year at a nominal rate of 10% and inflation is 2%, we can say that the nominal rate is 10% but the real rate is only (1.10/1.02) - 1 = 7.84%.
 
This is because goods which cost £100 today will cost £102 in a year's time.
 
Therefore only a 7.84% return has been made if we take into account the new prices of goods.
 
 
Notice how the inflation rate and the real rate compound together to produce the nominal rate, for example:
 
(1.02 x 1.0784) - 1 = 10%.
 
 
When either the inflation rate or the real rate is low, the result is approximately the same as simply adding or subtracting rates.
 
For example when the nominal rate is 6% and the inflation rate is 4%, the real rate is approximately:
 
6% - 4% = +2%.
 
(Calculated more strictly, it would be (1.06/1.04) - 1 = 1.92%.)
 
 
Taking another example, when the nominal rate is 3% and the inflation rate is 4%, the real rate is approximately:
 
3% - 4% = -1%.
 
(Calculated more strictly, it would be (1.03/1.04) - 1 = -0.96%.)
 
 
 
2.
 
Inflation-proof.
 
 
3.
 
Tangible. For example the ''real assets'' of a business would include its stock, plant and machinery.
 
 
4.
 
''Real property'' means land and buildings.
 
 
5.
 
Real-life issues and opportunities are those with a strong foundation in practical experience. 
 
(Contrasted with other issues which are considered to be more theoretical.)
 
 
6.
 
''Options''. Relating to an operational decision or outcome.
 
 
7.
 
''Economics''. Referring to the part of the total economy which excludes financial markets and financial services.




== See also ==
== See also ==
* [[Credit rating]]
* [[Real interest rate]]
* [[Credit rating agency]]
* [[Real rate]]
* [[Credit watch]]
* [[Nominal]]
 
* [[Real option]]
[[Category:Treasury_operations_infrastructure]]
* [[Real economy]]

Revision as of 07:12, 14 July 2014

1.

A term which has been restated to exclude the effects of inflation.

For example, if £100 is invested for a year at a nominal rate of 10% and inflation is 2%, we can say that the nominal rate is 10% but the real rate is only (1.10/1.02) - 1 = 7.84%.

This is because goods which cost £100 today will cost £102 in a year's time.

Therefore only a 7.84% return has been made if we take into account the new prices of goods.


Notice how the inflation rate and the real rate compound together to produce the nominal rate, for example:

(1.02 x 1.0784) - 1 = 10%.


When either the inflation rate or the real rate is low, the result is approximately the same as simply adding or subtracting rates.

For example when the nominal rate is 6% and the inflation rate is 4%, the real rate is approximately:

6% - 4% = +2%.

(Calculated more strictly, it would be (1.06/1.04) - 1 = 1.92%.)


Taking another example, when the nominal rate is 3% and the inflation rate is 4%, the real rate is approximately:

3% - 4% = -1%.

(Calculated more strictly, it would be (1.03/1.04) - 1 = -0.96%.)


2.

Inflation-proof.


3.

Tangible. For example the real assets of a business would include its stock, plant and machinery.


4.

Real property means land and buildings.


5.

Real-life issues and opportunities are those with a strong foundation in practical experience.

(Contrasted with other issues which are considered to be more theoretical.)


6.

Options. Relating to an operational decision or outcome.


7.

Economics. Referring to the part of the total economy which excludes financial markets and financial services.


See also