Define the term recession?

Q: Explain Long-term liabilities?

A: The balance sheet of the business represents the financial position of the business with assets and…

Q: What happens to junk bonds in a recession

A: A junk bond refers to that that bond issued by companies that do not have an investment grade credit…

Q: Relationship of monetary policy to inflation

A: Inflation: Inflation is defined as a situation in which the general price level of the economy rises…

Q: What is marginal rate (for debt)?

A: Marginal rate of debt is the rate of interest expected by the investors on their debt instruments…

Q: How do risk and inflation impact interest rates in the economy?

A: Introduction: The inflation needs to be adjusted in the interest rate of mortgage payments. Due to…

Q: In a complete sentence give an example of something that has been affected by inflation.

A: In finance inflation is the rate of increase in prices of goods and services over a time period. An…

Q: Can nominal interest rates be negative?

A: Nominal interest rate is the rate that is paid to lender for the amount or money borrowed.

Q: Difference between current and long term liabilities?

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: Explain Interest Rates and Inflation Expectation?

A: An interest rate is the measure of cash a bank or creditor charges for right of entry to cash. The…

Q: What is the causes of the financial risk?

A: financial risk - financial risk is the possible danger of losing money from an investment made by…

Q: What distinguishes current liabilities from long-term liabilities?

A: Liabilities Liabilities are referred to as the obligations of the business towards the creditors for…

Q: How do investors deal with inflation when they determine interest rates in the financial markets?

A: Introduction: Inflation is an increase in the overall level of prices of products in the economy…

Q: What is the relationship between the time value of money and inflation?

A: Inflation is the rate at which the purchasing capability of money decreases over time. It is…

Q: How does inflation affect interest rates, security prices, and financial planning?

A: Inflation is the situation in the economy due to which prices of goods and services increases, as a…

Q: What is the difference between a budget deficit and a budget surplus?

A: A budget deficit is when the expenses outweigh the revenue brought in by a project. Conversely, a…

Q: Determine if a fixed or a floating debt rate should be used during a recession.

A: A fixed debt rate is the interest rate that remains the same over the lifetime of the debt…

Q: What is a federal budget deficit or surplus? How does this affectinterest rates?

A: The question is based on the concept of federal budget position and its impact on the prevailing…

Q: Why interest rate tends to increases before the crisis and then decline during the crisis? (refer to…

A: During financial crisis the value of financial instruments and assets reduce significantly. To…

Q: What effects do relative inflation rates have on relative interest rates?

A: Relative Inflation Rates can be defined as the rates of inflation and exchange rates established…

Q: What will be Effects of Changes in “Going-In” Cap Rates in Response toSupply and Demand?

A: Going-in-cap rate: Going-in-cap rate is the cap rate originated on the ratio of the initial year of…

Q: What is Inflation Premium?

A: Inflation premium: An inflation premium is the piece of the common interest rate coming about…

Q: What is the concept of present value? How does it affect inflation

A: Increase in general price levels in an economy is known as inflation. Due to inflation, the cost of…

Q: What does the financial breakeven point shows?

A: A breakeven point is a situation of no loss no profit. The breakeven point is generally calculated…

Q: What effect does inflation typically have on the EOQ?

A: Economic order quantity (EOQ) is the optimal purchasing order number to keep stock costs, such as…

Q: What are the essential differences among demand deposits, savings deposits, and time deposits?

A: Deposits refers to the sum of money that are deposited with banks or any financial institution.…

Q: What is credit risk

A: In the world of finance credit risk is one of the most important risk and one of the most tangible…

Q: How to define credit risk and how to limit that risk.

A: Business provide credit to customers to encourage buying more So payment are paid by customers on…

Q: Define the term Depreciation Allowance under Inflation?

A: Inside these laws of unique cost depreciation, the absolute estimation of the duty exclusions in…

Q: Why inflation is considered and have effect in present value?

A: Inflation is the increase in the general price level of the country. It is an important indicator of…

Q: Which method should be used if management anticipates a periodof inflation? Why?

A: Inflation is a term that refers to increase in prices of commodities and services while purchasing…

Q: a. What payoff do bondholders expect to receive in the event of a recession? b. What is the promised…

A: Bondholders: They are holders of bonds and receive coupon payments and the principal amount for…

Q: How VAT affects the interest rate?

A: Solution-Value Added Tax  A value-added tax (VAT) is a consumption tax placed on a product whenever…

Q: How does the interest rate adjust?

A: Interest rate levels are based on two factors- supply and demand of credit: an increase in the…

Q: Define the term Monetary liabilities.

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: Debt crisis  and solutions?

A: To run the business, corporations have to borrow the funds which will be repaid later with…

Q: What makes it so difficult to correctly forecast interest rate changes?

A: Interest rates are used to understand price and value of money. Interest rate is the cost incurred…

Q: How does an increase in the income rate affect the breakeven point?

A: Break-even sales is the dollar amount of revenue at which a business earns a profit of zero i.e. No…

Q: What is the basic accounting problem created by the monetary unit assumption when there is…

A: The Financial Accounting Standards Board (FASB) is known as the is private, non-profit organization…

Q: Define the term break-even interest rate?

A: The question is to define break even interest rate. The concept of  Break even interest rate is…

Q: What is the role of the Federal Reserve with interest rates during a recession?

A: Federal bank is central bank whose main function is maintaining enough liquidity in system so that…

Q: Were low-interest rates the underlying cause of the financial crisis? Explain.

A: Financial crisis A financial crisis refers to a condition when there is a significant decrease in…

Functions of the Federal Reserve System

The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.

Elastic and Inelastic Markets

Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.