Suppose one year T-bills current yield 5.95% in the future inflation rate is expected to be constant

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose one year T-bills current yield 5.95% in the future inflation rate is expected to be constant at 5.25% per year. What is the approximate real rate of return?

Related Book For answer-question

Macroeconomics

ISBN: 978-0321675606

6th Canadian Edition

Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone

See More Books

Posted Date: Mar 03, 2024 10:05 AM

See More Questions

1. You want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,400 per year, beginning immediately . You will make 4 deposits in an account that pays...
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 4.50% per year. What is the real risk-free rate of return, r*? Disregard any cross-product...
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
You require inventory and accounts receivable collateral for all C&I loans. You have a guideline of an advance rate of 70% for customer receivables of less than 60 days of age. Older receivables get...
Described the influence of Germany's cultural element on global business: a. Education, family, and marriage b. Medicine, art structures
Suppose one of your friends offered the following argument: A rightward shift in demand will cause an increase in price. The increase in price will cause a rightward shift of the supply curve, which...
Some of the prior interviews suggest that the company is so cheap that they wont pay people what they are worth. Have you had similar experiences?
Norman Company's income statement for the year ended December 31, 2010, contained the following condensed information. Norman's balance sheet contained the following comparative data at December 31....
Please convert this E-R diagram to Relational model. Production Fixed Expenses FixedExpenseID DatePaid Description Amount Category Item Show/Production ShowID Actors Budget SetBudget OpiningDate...
Alice has invented a new card game to play with Bob. Alice made a deck of cards with random values between 1 and 52. Bob picks 5 cards. Then, he has to rearrange the cards so that by utilizing the...
If an economy has 10 million people who are unemployed, the unemployment rate is 20%, and there are 70 million working-age people in the economy as a whole, then what is the number of people not in...
We are analyzing Sailing Boat Co and we have the following information: The company has a total EV of 5,000 million Eur of which the Weight of Equity is 90% and the Weight of Debt is 10%. The stock...
Your telecommunications firm is small but steadily growing. You have identified a profitable investment opportunity and need to raise $10M in cash to finance this investment. Your plan is to sell a...
An unmarried decedent has a gross estate of $25,260,000 and passes away in 2022. Expenses associated with administering the estate are $200,000. The decedent has also made $400,000 in taxable gifts...
Jamal has been approved for a $125,000 loan, 30-year mortgage with an APR of 5.3%. He is closing on April 5th. How much should he expect to pay in prepaid interest at closing?
It is the 26th of February, and you have 12 provisional submissions to finalise for clients with a February year-end. Please use schedule attached to prioritise clients and provide a strategy on how...
You are to design a 4-bit Excess-8 to 2's complement converter. For example, 0010excess-8 represents the value -6, and hence its corresponding 2's complement representation is 10102's. The converter...
At the beginning of the year, Lam Ltd. had total assets of $800,000 and total liabilities of $500,000. Use this information to answer each of the following independent questions. (a) If Lam's total...
In a certain economy the production function is Y = A(100N - 0.5N2), Where Y is output, A is productivity, and N is total hours worked. The marginal product of labour associated with this production...
Explain the difference between the overall government budget surplus and the primary surplus. Why are two surplus concepts needed?
An economy has full-employment output of 1000. Desired consumption and desired investment are Cd = 200 + 0.8(Y -T) - 500r; Id = 200 - 500r. Government purchases are 196 and taxes are T = 20 + 0.25K...
Verify the color SU(3) representations for combinations of three or fewer quarks and antiquarks given in Eq. (19.28). Data from Eq. 19.28 qq=303=108 qq 3 3 603, 999 3 3 3 = 36315, qqq 3 3 3 1088 10,
Prove that Eq. (19.34) gives the simplest multi-gluon and gluon-quark states that contain an $\mathrm{SU}(3)$ color singlet in the decomposition. Data from Eq. 19.34 (GG)1: (88)1 (Gqq) : [8 (383)8]...
A textile manufacturer is concerned about the strength of cotton yarn. In order to nd out whether fiber length is an important factor in determining the strength of yarn, the quality control manager...

Suppose one year T-bills current yield 5.95% in the future inflation rate is expected to be constant

Question:

Expert Answer:

To calculate the approximate real rate of return we can use the Fisher equation which ... View the full answer

Macroeconomics

Students also viewed these finance questions