If the Quantity of Loanable Funds Demanded Exceeds the Quantity

question 50

Multiple Choice

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, there is a

• A)shortage and the interest rate is below the equilibrium level.
• B)surplus and the interest rate is above the equilibrium level.
• C)surplus and the interest rate is below the equilibrium level.
• D)shortage and the interest rate is above the equilibrium level.

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Definitions:

Conversion Premium

The extra amount an investor pays to convert a convertible security into a specified number of shares of common stock, above its current market value.

Conversion Price

The predetermined price at which convertible securities can be exchanged for a specified number of common shares.

Current Stock Price

The price at which a stock is trading on the stock market at any given time.

Real Option

The opportunity to undertake certain business initiatives, such as deferring, abandoning, expanding, or contracting a project, based on future events.