Quick ref

• FOMC sets Fed target rate for overnight interbank lending - primarily for banks to maintain reserves 
• Do this by buying govt securities which infuses cash and lowers rate, or selling govt securities which tightens supply 
• Could also do this by changing reserve rate but is drastic measure 
• LIBOR tracks very closely to Fed rate 
• In US, banks have prime lending as spread to Fed of about 300bps - other debt is sub prime 
• In RoW, it's usually quoted as spread to LIBOR
• If Fed decreases rate, economy is stimulated, consumer spending increases, so growth increases. Interest rates are low, too, so investors usually prefer equity markets 
• Conversely, when rates are increased substantially, credit tightens and investors may choose bond markets in general 

Will be interesting to see chart with fed rate and equity performance 

Duration of bond measures risk and sensitivity to prices based on change in interest rate - is essentially measuring wt avg CF of bond by year to maturity. Higher duration, higher vol. Zero coupon usually most sensitive 

Rule of 70 - divide by int rate to see how many years to double investment