Floor Price Investopedia

A price floor is the lowest legal price a commodity can be sold at. An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product. The lowest value that convertible bonds can fall to given the present value of the remaining future cash flows and principal repayment.

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The bond floor is the value at which the.

Floor price investopedia.

Price floor has been found to be of great importance in the labour wage market. By observation it has been found that lower price floors are ineffective. Floors in wages. The most common price floor is the minimum wage the minimum price that can be payed for labor.

Price floors are used by the government to prevent prices from being too low. Nounthe lowest price a price which cannot go any lower. Ceiling refers to the highest price the maximum interest rate or the largest of some other factor involved in a transaction. The lowest preconceived price that a seller will accept.

A price floor or a minimum price is a regulatory tool used by the government. More specifically it is defined as an intervention to raise market prices if the government feels the price is too low. Investopedia is part of the dotdash publishing family. Price floor is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.

Price floors are also used often in agriculture to try to protect farmers. Interest rate floors are utilized in derivative. The maximum level permissible in a financial transaction. The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold.

Minimum wage is an example of a wage floor and functions as a minimum price per hour that a worker must be paid as determined by federal and state governments.