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Chapter 02 Determinants of Interest Rates




Question;49. Suppose you borrow $15,000 and then repay the loan;by making 12 monthly payments of $1,297.92 each. What rate will you be quoted;on the loan? What is the effective annual rate you are paying?;50. What is the loanable funds theory of interest;rates?;51. What is the difference between the expected real;interest rate and the real rate of interest actually earned?;52. Can the actual real rate of interest be negative?;When? Can the expected real rate be negative?;53. In October 1987 stock prices fell 22% in one day;and bond rates fell also. Use the loanable funds theory to explain what;happened.


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