With a Floating-Rate Note, the Interest Rate on the Note

question 169

Multiple Choice

With a floating-rate note, the interest rate on the note changes

• A) when the risk level of the borrower changes.
• B) when the prime rate changes.
• C) when the demand for loans changes.
• D) when bank profits change.

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Definitions:

Shortages

A situation where the demand for a product exceeds its supply at a particular price, often leading to increased prices.

Price Floor

Price floor is a government or regulatory imposed minimum price set above the equilibrium price, preventing the market price from falling below a certain level.

Surplus Of Corn

A surplus of corn signifies a situation in which the supply of corn exceeds the demand, potentially leading to lower market prices and stockpiling.

Black Market

An illegal trade of goods or services not sanctioned by official regulations or subjected to governmental taxes.