But if the widget making machine cost £1,000 and lasts for ten years then the accountants knock Depreciation of 10% of the value of the machine (£100) off your profit each year, reducing the profit to £80.
If you buy a bit of metal for £90, turn it into widgets and sell them for £270 then you have made a cash profit of £180….
When Interest Rates (IR) are high (i.e. borrowing is expensive) consumers pay more for their mortgages, loans and credit, so have less disposable income and spend less…inflation goes down.
You probably sort of know how index linked gilts, or “linkers,” work. The redemption value is linked to the change in the retail price index, or RPI, that takes place over the life of the gilt.
Another word for duration could be the average life of a bond. Most bonds pay annual or semi-annual coupons and have a redemption date. So whilst a bond maturing in three years and with a £5 annual…
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