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Factors Controlling the Rate of Interest on Long-Term Investments

Published online by Cambridge University Press:  18 August 2016

H. E. Raynes
H. E. Raynes*
Affiliation:
Legal and General Assurance Society
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Extract

The net rate of interest yielded by the investment of insurance funds has seldom departed far from 4%. With such a long record of a fairly constant rate of interest we may not unreasonably ask ourselves whether 4% is in any sense a “natural” rate of interest for long-term investments and, if so, what are the factors which control the rate within measurable distance of this figure. Professor Cassel has definitely put the question “why is the rate of interest -04 instead of -004 or -0004?” and he has answered it by indicating that the rate is controlled by the duration of human life.

Type
Research Article
Information
Journal of the Institute of Actuaries , Volume 66 , Issue 2 , July 1935 , pp. 167 - 195
Copyright
Copyright © Institute and Faculty of Actuaries 1935

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