Chapter 06

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Interest Rates : 

Interest Rates Chapter 6 Interest rates are the prices of borrowed money. The rates move up and down like any other price reflecting supply and demand forces. Monetary Policy adds a political factor to this outcome. The rates are important influences on financial decisions, whether we are discounting or compounding. Rates reflect both current and expected inflation, liquidity, default probabilities and currency fluctuations. 6-1

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