You purchased shares of a mutual fund at a price of $20 per share at the beginning of the year and paid a front-end load of 6.0%
. If the securities in which the fund invested increased in value by 10% during the year, and the fund's expense ratio was 1.5%, your return if you sold the fund at the end of the year would be
By adjusting the interest rates, the Fed influences the interest rate that banks charge customers when they borrow. An increase in the fed funds rate causes a rise in bank interest rates on loans and mortgages.
Interest rates are a monetary policy tool that the Fed uses to regulate the money supply in the economy. Should the fed desire to increase the money supply, it lowers the interest rates making the cost of borrowing attractive. An increase in interest rate makes borrowing expensive and hence reduces the money supply. The Fed uses interest rates to influence the money supply by encouraging or discouraging borrowing of money by firms and households
1. Increases in demand will increase both the interest rate and the total amount of borrowing and lending. Decreases in demand will decrease both the interest rate and the total amount of borrowing and lending.
