This problem involves an understanding of the time value of money (TVM), a concept which holds that a dollar today is worth more than a dollar in the future, because of its ability to earn interest and grow over time. In the finance world, the TVM is represented via an interest rat...
7. According to the liquidity preference theory, the "price of money"-interest rate-is determined by the demand for and supply of money. A decrease in the money supply gives rise to an upward pressure on interest rate. A rising interest rate means an increase in the cost of investment, ...
How does a change in the value of the dollar affect consumers? In monetarism, how will a decrease in the money supply affect the price level in the short run? How will an increase in the money supply affect aggregate demand? When the money market is drawn with the value of...
If you're like most people, your home is your biggest financial asset. As your home increases in value, so does your equity. Equity is the difference between how much you owe on your home and what it's worth. That difference can become profit when you sell your home. Understanding how...
However, the owners of older bonds are stuck with their lower rates of return. On the secondary market where bonds are resold, their value will decrease to compensate for the lower return. The investor who holds bonds in an investment portfolio doesn't lose money but does lose the...
So, too, will the desire of the public to hold their money as currency rather than bank deposits. The Fed can estimate the effects of these factors on its actions, but cannot control them. How does growth in the money supply affect interest ...
Notional value is the total amount of money that a position taken in a financial contract controls. What Is Notional Value? Notional value is a term often used by derivatives traders to refer to the total value of the underlying asset in a contract. It can be the total value of a positio...
Gas prices are on the rise. If you have a long commute, those rising prices can mean a big jump in spending ahead. Instead of driving to work, look into public transportation options or talk with co-workers about a carpool option to save money. Next:Decrease your withholding. 12/42 Cr...
Getting a rain barrel and attaching it to your downspout gives you a nice, free supply of water for “non-potable uses, such as watering plants or cleaning.” Our neighbour does this, and it is surprising how strong a flow of water is delivered via the tap on his rain barrel. ...
If the federal funds rate hasn’t really been on your radar, have no fear. What follows will help you more fully answer the question: How does the Federal Reserve interest rate affect me? Then, you’ll be on your way to making the best money management decisions for yourfinancial goals,...