If investors require a 10 percent real rate of return, and the inflation rate is 8 percent,
Question:
If investors require a 10 percent real rate of return, and the inflation rate is 8 percent, what must be the approximate nominal rate? The exact nominal rate?
First of all, the nominal rate is approximately equal to the sum of the real rate and the inflation rate: 10 percent + 8 percent = 18 percent. From Equation 8.3, we have:
Therefore, the nominal rate will actually be closer to 19 percent.
Transcribed Image Text:
1 + R= (1 + r) x (1 + h) = 1.10 x 1.08 = 1.1880
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (1 review)
The exact nominal rate is 1936 To calculate this we c...View the full answer
Answered By
Mary Boke
As an online tutor with over seven years of experience and a PhD in Education, I have had the opportunity to work with a wide range of students from diverse backgrounds. My experience in education has allowed me to develop a deep understanding of how students learn and the various approaches that can be used to facilitate their learning. I believe in creating a positive and inclusive learning environment that encourages students to ask questions and engage with the material. I work closely with my students to understand their individual learning styles, strengths, and challenges to tailor my approach accordingly. I also place a strong emphasis on building strong relationships with my students, which fosters trust and creates a supportive learning environment. Overall, my goal as an online tutor is to help students achieve their academic goals and develop a lifelong love of learning. I believe that education is a transformative experience that has the power to change lives, and I am committed to helping my students realize their full potential.
5.00+
4+ Reviews
21+ Question Solved
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Question Posted:
Students also viewed these Business questions
-
Who is the largest debtor in the world? The U.S. federal government, of course. As of October 6, 2010, the national debt was more than $13 trillion, more than $1 trillion of which accrued in 2009...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The table below reports the inflation rate and the annual rate of return on treasury bills in several countries for the years 1984 and 1985. Inflation Rate and Interest Rate for Selected Countries...
-
The objective of this problem is to design and develop a program for Huffman coding algorithm. The discrete source has an alphabet X = {x1, x2, x3, x4, x5, x6, x7, x8, x9} with corresponding...
-
Suppose that in our National Geographic example, half of the original cost of the rotogravure printing press is fixed and half is sunk. How low can the offered price go before the printer will...
-
A contractor is preparing a bid to install swimming pools at a new housing addition. The estimated time to build the first pool is 35 hours. The contractor estimates an 85 percent learning rate,...
-
In 2016, a father of two minor children in Cuyahoga county, Ohio, filed a claim to determine custody of the children. At the pretrial, the father informed the magistrate he wanted to be named a legal...
-
On July 1, a city issued, at par, $100 million in 6 percent, 20-year general obligation bonds. It established a debt service fund to account for resources set aside to pay interest and principal on...
-
Using concepts from Appendix B on the accompanying CD with this book on the DDM and this chapter, answer the following questions. (a) Derive an expression for the P/E ratio in terms of the pay out...
-
Locate the Treasury bond in Figure 8.5 maturing in July 2026. What is its coupon rate? What is its bid price? What was the previous days asked price? The bonds coupon rate is 1.875, or 1.875 percent...
-
Mancini Outfitters Co. has a fleet of automobiles and trucks for use by salespersons and for delivery of office supplies and equipment. East Village Auto Sales Co. has automobiles and trucks for...
-
Why is it better to save an entire ArrayList to an object output stream instead of program ming a loop that writes each element?
-
The heights of Grade 3 students in a school are distributed normally with an average of 133 cm and a standard deviation of 9 cm. What percent of children are taller than 124 cm?
-
Atreides International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 15,500 solaris, debt in the amount of 8,000 solaris, and equity of 7,500...
-
1. According to your interpretation, which single reason provides the most compelling rationale for why the Transactional Model replaced the Linear Model? Pick only one (again: process, relational,...
-
James, who is in the 35 percent marginal tax bracket with a 15 percent tax rate on dividends, owns 100 percent of the stock of JJ Inc. This year, JJ generates $562,000 taxable income and pays a...
-
How much work is required to move a + 1 . 5 C charge from a + 2 . 7 C charge that were initially 1 1 . 5 cm away to 6 . 0 cm ?
-
The tooth numbers for the automotive differential shown in the figure are N2 = 16, N3 = 48, N4 = 14, N5 = N6 = 20. The drive shaft turns at 900 rev/min. (a) What are the wheel speeds if the car is...
-
Prove the following D,(cos x) = - sin x (Hint: Apply the identity cos(A + B) = cos A cos B sin A sin B)
-
Bubbling Crude Corporation, a large Texas oil producer, would like to hedge against adverse movements in the price of oil because this is the firms primary source of revenue. What should the firm do?...
-
A company produces an energy-intensive product and uses natural gas as the energy source. The competition primarily uses oil. Explain why this company is exposed to fluctuations in both oil and...
-
A company produces an energy-intensive product and uses natural gas as the energy source. The competition primarily uses oil. Explain why this company is exposed to fluctuations in both oil and...
-
d. In this program, only one process prints out the "lucky number." Why does this happen, and how can you fix it? [4 pts] #include #include int main(int argc, char **argv) { MPI Init(&argc, &argv);...
-
c. When run with four processes (mpirun -n 4 ./a.out), this program freezes and does not produce any output. Why does it freeze, and how can you fix the bug? [4 pts] #include #include #include int...
-
a. Your MPI program crashes and prints the following error message. What caused this crash? [2 pts] [jet15:8242] *** An error occurred in MPI Send jet15:8242] *** reported by process [4135714817,1]...
Study smarter with the SolutionInn App