Respuesta :
Emil company has $4 million in bonds outstanding. The current year sees a drop in the applicable market interest rate. Bonds issued by Emil Company are likely to appreciate in fair value.
Why Do Interest Rates Exist?
The interest rate, which is calculated as a percentage of the principal, or the loaned amount, is the cost that a lender charges a borrower. The interest rates on loans are typically stated using the annual percentage rate (APR).
Earnings from savings accounts and certificates of deposit held by banks and credit unions are also subject to interest rates (CD). Annual percentage yield is the term used to describe the interest earned on certain bank accounts (APY).
How Are Interest Rates Set?
One of the numerous factors influencing the interest rates that banks charge is the economy. Every bank based its assortment of APRs on the interest rate, which is decided by the country's central bank (in the U.S., this would be the Federal Reserve).
When the central bank sets interest rates at a high level, debt becomes more expensive. People are less willing to borrow when it is expensive, which reduces consumer demand. Additionally, interest rates often rise together with inflation.
Learn more about interest rates with the help of the given link:
brainly.com/question/8925253
#SPJ4
