FINANCIAL
MARKETS AND INTEREST RATES 2-15
Each of these factors fluctuates, given current and expected conditions
of the economy, the company, and the market in which the company
conducts business. Interest rates compensate investors for loaning
money, for anticipated inflation, and for assuming counterparty,
liquidity, and interest rate risk.
The term structure of interest rates is represented by a yield curve
and refers to the relationship between long-term and short-term
interest rates.
You have completed Unit Two: Financial Markets and Interest Rates. Please complete
Progress Check 2 and then continue to Unit Three: Time Value of Money. If you answer
any questions incorrectly, we suggest that you review the appropriate text.