Module 3 - Interest rates Flashcards
1
Q
is the premium paid by barrowers for earlier availability and a reward received by lenders for delaying consumption.
A
Interest rates
2
Q
Simple Interest Formula
A
P x R x T
P: Principal
R: Rate
T: Time period
3
Q
If the interest rates decreases, the demand for barrowings will…
A
increase. Because more investors or consumers will barrow funds for business expansion.
4
Q
Component on interest of loan
A
(1) Pure interest
(2) Inflationary Premium
(3) Risk Premium
5
Q
Who regulates the interest rates in as one way in controlling the inflation and smoothing out the business cycle and ensuring financial stability.
A
BSP or Bangko Sentral ng Pilipinas
