Canadian Securities Course (CSC) Level 1 Practice Exam

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What are the determinants of interest rates?

Demand and supply of consumer goods
Foreign exchange rates only
Central bank policies
Demand and supply of capital, default risk, foreign interest rates and exchange rates, central bank credibility, inflation

The correct answer is: Demand and supply of capital, default risk, foreign interest rates and exchange rates, central bank credibility, inflation

The correct answer is D because interest rates are influenced by various factors such as the demand and supply of capital, default risk, foreign interest rates and exchange rates, central bank credibility, and inflation. These determinants collectively play a crucial role in shaping interest rates in the market. Options A, B, and C do not directly affect interest rates as comprehensively as the factors listed in option D.