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Spot Interest Rate

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Spot interest rate
Interest rate fixed today on a loan that is made today. Related: Forward interest rates.

Spot Interest Rate
The interest rate for loans and debt securities issued at a given time. The advantage of borrowing at the spot interest rate is the fact that it is a known quantity and one can amortize the loan accordingly. The risk of the spot interest rate is that interest rates may rise or fall in the future to the disadvantage of one of the parties to a contract. Some investors speculate on the difference between a spot interest rate and a forward interest rate.


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Univariate Approach In the previous subsection we presented the framework that will be employed to study the dynamic relationship between spot interest rates and survey-based forecasts.
In this case the volatility structure becomes deterministic and the spot interest rate becomes the only state variable.
Reflecting a growing certainty among market participants that short-term spot interest rates will remain near zero for some time, yields implied by euro-yen futures contracts across maturities fell, and the yield on the two-year Japanese government bond declined 8 basis points, to 6 basis points.
 
 
 
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