Floor Price Investopedia

A price floor is the lowest legal price a commodity can be sold at.

Floor price investopedia.

An interest rate floor is an agreed upon rate in the lower range of rates associated with a floating rate loan product. A price floor or a minimum price is a regulatory tool used by the government. 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. 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.

By observation it has been found that lower price floors are ineffective. The opposite of a price ceiling is a price floor which sets a minimum price at which a product or service can be sold. Price floors are used by the government to prevent prices from being too low. Nounthe lowest price a price which cannot go any lower.

Interest rate floors are utilized in derivative. The maximum level permissible in a financial transaction. Price floors are also used often in agriculture to try to protect farmers. Price floor has been found to be of great importance in the labour wage market.

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. The bond floor is the value at which the. The lowest value that convertible bonds can fall to given the present value of the remaining future cash flows and principal repayment.

Investopedia is part of the dotdash publishing family.