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8th June, 2018 - Mudit's Magazine (Part 8)
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Mudit Gupta is teaching live on Unacademy Plus

Mudit Gupta
B.Tech. (ECE), LAMP Fellow (2015), Quora Top-Writer, 2018 and AIR 76 DU LLB Entrance Exam, 2016

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Can anyone explain the relation between inflation and interest rates? And why profit is determined as interest rate-inflation? Clarification will be really helpful.
Lingaraj Vanka
4 months ago
For example When company issues Bonds of worth 10000 crore rupees in which each bond price is 1000 per unit with the coupon rate(intrest rate) of 10% ..As Price of Bond is not always as same as Face value and Bonds are traded on Stock exchange and price changes dialy..So Price can increase or Decrease at that Particular time..So here When inflation increases Intrest charged on Savings Account in banks will also increase ...So this result to Less demand towards Bonds ..and more people will Save Money with certain intrest rate in banks...Here Profit=Intrest rate-inflation implies that Profit on Bonds we get at that time of Maturity ....Here bonds issued at 10% when inflation is let say 5% then profit is 5%...So Here when inflation increases The intrest rate obtained by bonds at the time maturity will decrease...Hence When inflation decreases the bond price will rise at the time of Maturity
  1. MUDIT' s MAGAZINE (MM) By: Mudit Gupta


  2. ABOUT ME Born and brought up in Delhi Engineer- Electronics and Communication College- Jaypee Institute of Information and Technology, Sector 62, Noida CGPA 8.4/10 LAMP Fellow DU LLB entrance =AIR 76 . Interests =writing and Blogging Reading about India MUDIT'S MAGAZINE -UNACADEMY


  3. 3 NEW PLUS COURSES . Re. 1 Course Fiscal Policy of India (To be launched by 8th June) GS 2 and GS 3 (Starts 20th June) - International Relations - Internal Security - Disaster Management - Important Acts and Bills Geography through maps using 350 MCQs (Starts 25th June) - Entire geography - Using maps and MCOs MUDIT'S MAGAZINE UNACADEMY


  4. GHANI ANNOUNCES TRUCE WITH TALIBAN (THE HINDU, PAGE 12) Ashraf Ghani To promote Afghanistan Taliban peace . President of Afghanistan . Backed by Pakistan Ashraf Ghani Ceasefire against Taliban . Theatre of terror activities IS, Taliban and other splinter groups No attacks on Taliban groups by police or army MUDIT'S MAGAZINE UNACADEMY


  5. On occasion of . Confidence . To promote peace EID . Operations Why this ceasefire against other groups building measure However . Such as ISIS and stability and bring Taliban to the negotiation table They would continue MUDIT'S MAGAZINE -UNACADEMY


  6. Implication . One sided ceasefire e Political move to promote Way forward . To be seen whether Taliban would agree or not peace . A signal that Afghanistan wants peace MUDIT S MAGAZINE- UNACADEMY


  7. 10-YEAR BOND YIELDS FALL JUST SHORT OF 8% (THE HINDU, PAGE 13) RBl increased the Repo Rate (Refer: Mudit's Magazine7th June, 2018) Inflationary expectation Inflation may rise Bond prices go down When inflation goes up Government Bonds Why? MUDITS MAGAZINE UNACADEMY


  8. Earlien Now Inflation-4% Interest on Bond-7% Net profit 3% Inflation-6% Interest on Bond is same-7% Net profit = 196 With the rise in inflation . Bond prices fall MUDIT'S MAGAZINE UNACADEMY


  9. Whenever you hear "Bond Yield in increasing" Whenever you hear "Bond yield is decreasing" Inverse relation Shortcut Implication If bond yield is falling Economy is in a healthy state positive It means prices are going down It means bond prices are going up Betweern yield and bond price If bond yield s increasing Economy is in a bad shape - negative


  10. UN INDIA BUSINESS FORUM, NITI AAYOG FORM CONSORTIUM TO HELP WOMEN ENTREPRENEURS THE HINDU, PAGE 14) UN India Business Forum NITI Aayog Consortium Why ? To promote women entrepreneurship . Providing mentorship . Marketing network . Financial assistance How? Skill training in entrepreneurship MUDIT'S MAGAZINE -UNACADEMY


  11. DAC APPROVES PROCUREMENT OF RADARS (THE HINDU, PAGE 11) Defence AcquisitionRadars Council . Headed by Defence Air Cushion vehicles 360 Degree surveillanceFast speed vehicles without mechanical rotation of antenna . Allows fast movement over shallow water swamps, sand bank Minister e Low maintenance . Approved procurement of 2 defence equipment . Those areas where boat can't move MUDIT S MAGAZINE- UNACADEMY


  12. Commemorative Stamps issued . Oliver Tambo Deen Dayal Upadhyaya Who was Oliver Tambo? . Anti-apartheid leader . President of African National Congress MUDIT'S MAGAZINE UNACADEMY


  13. Hague Abduction What is HCCH Hague Abduction Convention . Drafted by Convention . Inter- .Applicable- Children below the age of 16 governmental organization . Netherlands . 83 Members . India is also a Years Hague Conference on Private International Law (HCCH) member MUDIT S MAGAZINE- UNACADEMY


  14. NGT TELLS TANNERIES TO PAY UP FOR TREATMENT PLANTS (THE HINDU, PAGE 6) Tanneries Factories that deal with animal skin Hub of tanneries in India In and around Kanpur Bank of river Ganga Tanneries generate tremendous amount of waste Mainly chromium Discharged in the river What is the issue? This waste is not processed MUDIT'S MAGAZINE-UNACADEMY


  15. 25% of the total cost . To be paid by the tanneries | National Gre e n Tribunal Ordered . Treatment plants would be set up in Kanpur MUDIT'S MAGAZINE UNACADEMY


  16. SOLUTION TO SIMLA WATER CRISIS SOON (THE HINDU, PAGE 6) . Koldam Dam - Bilaspur & Mandi Himachal Pradesh Satluj River MUDIT'S MAGAZINE UNACADEMY