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Interest Rates
An interest rate, denoted r, is a rate of return that reflects the relationship between differently dated cash flows.
Required rates of return.
The minimum rate of return an investor must receive in order to accept the investment.
Discount rates
Rate at which we discount a future amount to find its value today.
Opportunity cost
The value that investors forgo by choosing a particular course of action.
Composition of Interest Rates:interest rate for a completely risk-freequickly.[PracticeC.LiquidityThis
Exchange Rates, International Trade, and Capital Flows:deficit surplus must be:Capitalapproachexpendituresaving decisions.
Interest Rates:rateRequiredDiscountOpportunitycostparticular course of action.
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