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The Additional Premium Added to the Real Interest Rate by Lenders

question 23

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The additional premium added to the real interest rate by lenders to compensate them for a debt instrument which cannot be converted to cash quickly at its existing value is called?


Definitions:

Rate of Return

The increase or decrease in value of an investment throughout a determined period, shown as a percent of the investment’s initial cost.

Natural Monopolies

A market situation where a single supplier, due to unique resources, technology, or economies of scale, can provide a product or service at a lower cost than any potential competitor.

Regulatory Agency

A governmental body responsible for enforcing specific laws and regulations to protect public interest in areas such as health, safety, and the environment.

Antitrust Policy

Regulations and laws that prevent monopolistic business practices, promote fair competition, and protect consumers from abusive behaviors by large companies.

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