There has been some discussion about whether we are entering an era of permanent stagnation/low growth or whether the natural interest rate will remain low for an extended period.
Many have voiced concerns about low IR environments, but I don’t often hear discussions of skew:
when rates are low, future payments are discounted less, meaning that well-understood cash-flows are more valuable than more speculative cash-flows vis-a-vis the higher rate period.
Continue reading “Concerns about low interest rates”
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