Question: When does the real interest rate go higher than the nominal interest rate? And why your investment in a depositing institution, your investment risk is

When does the real interest rate go higher than the nominal interest rate? And why your investment in a depositing institution, your investment risk is almost zero? why it is impossible to eliminate the nonsystematic risk by diversifying you investment.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Section A. The unemployment rate in April 2020 was 14.7%, while in March 2020 was 4.4%. What is your best estimate for the real output growth rate in this period? Assume the US real output was...

You do not have to do any calculations for this question. You only need to explain, in a few sentences, what each example means; hence, your answers are strictly qualitative. However, you should be...

Examples 1, 2, 7 and 8 in Ch. 12 and example 1 in Ch. 13. For examples 1 and 2 in Ch. 12, assume the net cash flow is $2,000,000, the tax rate is 40% and the cost of common equity is 10% which is...

Please review the files and qualitatively discuss the following examples: Ch. 12 1 2 7 8 Ch. 13 1 For examples 1 and 2 in Ch. 12, assume the net cash flow is $2,000,000, the tax rate is 40% and the...

Compared to higher inflation rates a lower inflation rate will increase or decrease the after-tax real interest rate when the government taxes nominal interest income. This tend to encourage or...

A personal financial advisor is helping a 70-year-old client make the safest investment for the client's age. It is the end of the month, and the advisor has a goal to sell $2,000 more of the...

Task O4. The unemployment rate in April 2020 was 14.7%, while in March 2020 was 4.4%. What is your best estimate for the real output growth rate in this period? Assume the US real output was growing...

C orrec tl y an s w er a llq u es t i o n s . Draw a correctly labeled graph of long-run aggregate supply, short-run aggregate supply, and aggregate demand, AND show each of the following for an...

helpkecm qq12 Problem 49: Which of these factors can shift the Aggregate Demand (AD) curve? More than one correct answer is possible. (a) Large changes in relative prices. (b) Change in net exports....

The problem of the firm given in class was to maximize the nominal firm value subject to technology and capital law of motion constraints. Note that the class derivation used net investment as the...

Use the Trapezoidal rule to estimate the value of f(x) =2x sin'x in the interval x-0 to x=z with n=5.

In this chapter, we saw that Amy, of Amys Baking Company, didnt do such a good job responding to a customers review. Rewrite Amys response to get a better reaction.

Audio is being sampled at the rate of 44.1 kHz using 8 bits. Two channels are being used. Calculate: a the size of a one second sample, in bits b the size of a 30-second audio recording in MiB

P-1) (100 Pts.) A chemical manufacturing company (CMC) has a contract for the procurement of the neccssaly chemicals from four suppliers. The chemicals purchased from Supplier A are priced at $20...

5. List the forces that shape a groups decisions

4. Identify how culture affects appropriate leadership behavior

3. Identify the qualities that make leaders effective at enacting change