The Market Value of a Fixed-Rate Liability Will Increase as Interest

question 40

True/False

The market value of a fixed-rate liability will increase as interest rates rise, although the market value of a fixed-rate asset will decrease as interest rates rise.

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Definitions:

Peak Efficiency

Peak Efficiency is the optimal state of operation where resources and processes produce maximum output with minimum waste or inefficiency.

ATC Curve

The Average Total Cost curve graphically represents the total cost per unit of output produced, calculated by dividing the total cost by the quantity of output.

Economic Profits

The total revenue of a business minus its explicit and implicit costs; it’s a measure of excess above the normal levels of profits businesses earn in a competitive environment.

Long-Run Equilibrium

A state in which supply equals demand, all firms are maximizing profits, and there is no incentive for market entry or exit.