Down Scaling Interest in Interest Rate

Mohammed H. S. Al Ashry^1,2

¹Department of Computer Science, the Community College, Shaqra University, Shaqra, Saudi Arabia.
²Department of Computer Science, the College of Sciences and Humanities, Shaqra University, Shaqra, Saudi Arabia.

DOI: 10.4236/tel.[phone]                

Abstract

During periods of high interest rates, businesses utilize their own capital, merge with other businesses, or diversify, and borrow when it is absolutely necessary. People also avoid hardship through refinancing during economic slowdowns because interest rates are low enough to recover some of their income and lower debt interest. High interest rates are more inviting to investments although hard to sustain in the long run. The future looks grim and interest rates have been down for a while, and will probably stay down for some time to come. This paper investigates ways to lower the earnings percentage in interest rates. A new set of the uniform series of the future worth of money involving linear gradients will be mathematically reformulated to investigate the possibility of lowering the interest rate for long term loans and mortgages. A new equation will be formulated and put into a tabulated practical example.

Keywords

Downscaling: Reducing, Rationalizing and Economizing, Mortgage: A Property Loan, Usually Based on the Value of the Property, Future Value of Money: Value of the Loan or Mortgage with Interest, If Payments Are Timely Made in Full, Present Worth of Money: Amount of the Loan, Mortgage, Compounding: In Finance, Combining Multiples of Payments and Interests

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Squalli, J. (2005) Are the UAE Financial Markets Efficient? Working Paper No. 05-01, EPRU, Zayed University.
[2]	Marashdeh, H. and Shrestha, M.B. (2008) Efficiency in Emerging Markets—Evidence from the Emirates Securities Market. European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275, Issue 12.
[3]	http://dufu.math.ncu.edu.tw/calculus/calculus_pre/node7.html
[4]	Filipovi′c, D. (2005) Interest Rate Models. University of Munich, Munich.
[5]	van Suntum, U., Kaptan, M. and Ilgmann, C. (2011) Reducing the Lower Bound on Market Interest Rates. Centrum für angewandte Wirtschaftsforschung, University of Muenster, Am Stadtgraben 9, 48143 Münster; Germany; Economic Analysis & Policy, Vol. 41, No. 2.
[6]	Hanweck, G. and Ryu, L. (2005) The Sensitivity of Bank Net Interest Margins and Profitability to Credit, Interest-Rate, and Term-tructure Shocks Across Bank Product Specializations. Working Paper 2005-02.