How Is the Equilibrium Interest Rate Determined

question 95

Multiple Choice

How is the equilibrium interest rate determined?  

• A) by the price of money 
• B) by the demand for money alone 
• C) by the supply of money alone 
• D) by the supply of money and by the demand for money

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Definitions:

Effective-interest Amortization

A method of amortizing the premium or discount on bonds payable that reflects interest expense on the outstanding balance of the bond over its life.

Issue Price

The price at which a company's shares or bonds are made available for sale when they are first issued to the public.

Book Value

The net value of a company's assets minus its liabilities, indicating the total value of the company’s equity as recorded in the financial statements.