Interest Rates Are Determined by the Supply and Demand For

question 91

Multiple Choice

Interest rates are determined by the supply and demand for:

• A) money.
• B) capital goods.
• C) loanable funds.
• D) foreign currencies.
• E) stocks.

---

Definitions:

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest and the return of the principal at maturity.

Treasury Bill

Short-term, highly liquid government debt obligation issued at a discount from the face value and returning the face amount at maturity.

Par Value

The nominal value of a security stated by the issuer.

Effective Annual Yield

This refers to the real return on an investment, taking into account the effects of compounding interest over a year.