When the Interest Rate Rises, People Are

question 144

Multiple Choice

When the interest rate rises, people are:

• A)less likely to save, that is, sell a financial asset.
• B)more likely to save, that is, sell a financial asset.
• C)less likely to save, that is, purchase a financial asset.
• D)more likely to save, that is, purchase a financial asset.

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Definitions:

Maturity Value

The amount that will be paid to the holder of a financial instrument at its maturity date, including principal and any remaining interest.

Premium

The amount paid for an insurance policy or the amount by which a bond or stock's value exceeds its underlying or face value.

Market Rate

The prevailing interest rate available in the marketplace for securities, loans, and deposits.

Coupon Rate

The interest rate on a bond, representing the annual interest payment made by the bond issuer relative to the bond's face value.