The _______________ is determined by the demand and supply for loanable funds in the market.
A)coupon rate
B)reserve requirement
C)interest-sensitive gap
D)risk-free real rate of interest
E)duration gap

Question

Quizplus · Accepted Answer

The risk-free real rate of interest is determined by the demand and supply for loanable funds in the market, as it reflects the underlying opportunity cost of investing funds in alternative uses. The coupon rate is the interest rate paid to bondholders; the reserve requirement is the percentage of deposits that banks must hold in reserve; the interest-sensitive gap is the difference between interest-sensitive assets and liabilities; and the duration gap is the difference between the maturities of a bank's assets and liabilities.

The _______________ Is Determined by the Demand and Supply for Loanable