FIN3101B: In our Discussions on Investment Appraisal Methods, Whether of Shares and Bonds : Corporate Finance Assignment, NUS, Singapore

Corporate Finance Assignment

In our discussions on investment appraisal methods, whether of shares and bonds, interest rates have often been brought up as a variable that affects the valuation of such instruments.
This research assignment seeks to explore the role of interest rates in the financial markets. In your report, discuss the following points:

• What are interest rates?
• How are they determined? (Who sets the interest rates and what tools do they employ?)
• In the context of Singapore, how are our interest rates determined? Why is this the case?
• How do interest rates affect the movements of prices of financial assets? (Explain the theory  logic behind this and not just focus on the formulas)