The Main Influences on Short-Term Interest Rates in Recent Years

question 2

Multiple Choice

The main influences on short-term interest rates in recent years have been:

• A)the business cycle
• B)the RBA's monetary policy
• C)changes in the risk premium in the 90-day BBSW
• D)the demand for funds by business.
• E)All of these.

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Definitions:

Present Value

The present-day valuation of an anticipated amount of money or cash flows, considering a predetermined rate of return.

Endowment

An economic term referring to all assets, financial and non-financial, given to an individual or institution for a specific purpose.

Asset Returns

The income generated from investing in financial or physical assets, usually expressed as a percentage of the purchase price.

Interest Rate

The segment of a loan that bears interest for the borrower, normally delineated as an annual percentage of the loan's unpaid balance.