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What happens when issuing bonds payable when the market interest rate is less than the stated interest rate?
premium
If there is an excess supply of money?
deposit more into interest-bearing accounts, and the interest rate will fall.
What happens to the future value of money when the inflation rate exceeds the interest rate?
it increases
If there is a fall in the interest rate?
businesses will be more likely to expand their facilities
If there is a fall in the interest rate, _____.?
businesses will be more likely to expand their facilities
What happens to bonds when interest rates fall?
When interest rates fall, the value of existing bonds increases. This is because the fixed interest rate on the bond becomes more attractive compared to new bonds issued at lower rates.
What happens when issuing bonds payable when the market interest rate is less than the stated interest rate?
premium
If there is an excess supply of money?
deposit more into interest-bearing accounts, and the interest rate will fall.
What are the Reasons for fall in money value?
Changes in fiscal policy Inflation rate Interest rate
What happens to the future value of money when the inflation rate exceeds the interest rate?
it increases
If there is a fall in the interest rate?
businesses will be more likely to expand their facilities
If there is a fall in the interest rate, _____.?
businesses will be more likely to expand their facilities
When interest rate is positive what happens to the value of money as?
decreases
When interest rate is positive what happens to value of money?
Decreases
Can FED decrease interest rate without purchasing bonds?
The feds don't decrease the interest rate, it just happens when securities are purchased
What happens to the present value of an annuity when the interest rate decreases?
it increases
What happens to the equilibrium interest rate if the demand for loanable funds shifts to the left?
If the demand for loanable funds shifts to the left, the equilibrium interest rate will decrease.
