In your role as a financial advisor at Eagle Consulting, you are preforming a complete financial analysis for Melinda Jacobsen, a successful business executive who is retiring in 10 years. A portion of this analysis covers that question of whether Ms. Jacobsen should refinance her home in order to provide additional funding for a long-term retirement investment.
Since “above and beyond” customer service is critical to the success of Eagle Consulting, in addition to providing a recommendation on possible refinancing options, you want to provide Ms. Jacobsen with some background information on the Federal Reserve and how it impacts interest rates.
Using the information about Melinda Jacobsen’s goals and the information you uncover during your research, write a recommendation document that explains the Federal Reserve, how the Federal Reserve impacts interest rates, possible loan options, and a final recommendation for what loan she should choose. To do so:
Download and read the Eagle Consulting Info Sheet
Write a 6-8 page recommendation structured in three parts:
Explanation on how the Federal Reserve Impacts interest rates (3-4 pages)
Explanation of loan options (2 pages + Excel chart)
Recommendation for a loan (1 page)
Part 1 – Federal Reserve’s Impact on Interest Rates
Discuss how the Federal Reserve uses the following tools to impact interest rates and the economy:
Open market operations
Discount rate
Reserve requirements
Part 2 – Loan Options
Research the current mortgage interest rates for a 10 year, 15 year, 20 year, and 30 year loan.
In Excel, graph the interest rates using years as the X-axis and interest rates as the Y-axis.
Using the graph, describe the following:
Type of yield curve presented in the graph.
Relationship between interest rates and number of years to maturity.Impact that risk and inflation has on the interest rates as the maturity date is lengthened.
Sample Solution
