interest rates

Question 1

define interest rate

Answer 1

the price charged by a bank per year for lending money

Question 2

interest rates have fallen

Answer 2

fallen form 0.75 to 0.1
- cost of borrowing decreases
- more likely to borrow money
- money can be used to hold a wider range of stock than comp
invest in new bathroom project = target new segment
- price is a key factor = offer more competitive prices

Question 3

CB of interest rate falling

Answer 3

• competitors can also benefit from the fall in interest
• they can do the same as this business
• lead to sales barely increasing

Question 4

conclusion

Answer 4

the fall in interets rates was oly 0.65
- not that much of an impact
- covid, brexit may take time to increase consumer confidence

Question 5

point 2 consumer

Answer 5

debt payments are lower
- people have more money to spend on goods
- tempt customers to purchase as they are paying back lower amount than 2019

Question 6

point 2 CB pound depreciation

Answer 6

• fall in interest rate may lead to the depreciation of the pound
• significant portion of products are imported from china
• forced to increase its price to break even
• inverse effect and lose competitive advantage