Module 3 - Interest rates

Question 1

is the premium paid by barrowers for earlier availability and a reward received by lenders for delaying consumption.

Answer 1

Interest rates

Question 2

Simple Interest Formula

Answer 2

P x R x T

P: Principal
R: Rate
T: Time period

Question 3

If the interest rates decreases, the demand for barrowings will…

Answer 3

increase. Because more investors or consumers will barrow funds for business expansion.

Question 4

Component on interest of loan

Answer 4

(1) Pure interest
(2) Inflationary Premium
(3) Risk Premium

Question 5

Who regulates the interest rates in as one way in controlling the inflation and smoothing out the business cycle and ensuring financial stability.

Answer 5

BSP or Bangko Sentral ng Pilipinas