An investment offers a total return of 11 percent over the coming year. Janice Yellen thins the total real return on this investment wil be only 7 percent. What does Janice believe the inflation rate will be ove the next year? (Do not ronudn intermediate calcculation and enter your answer as a percent rounded to 2 decimal place, e.g., 3216
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An investment offers a total return of 11 percent over the coming year. Janice Yellen thins the total real return on this investment wil be only 7 percent. What does Janice believe the inflation rate will be ove the next year? (Do not ronudn intermediate calcculation and enter your answer as a percent rounded to 2 decimal place, e.g., 3216)
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- An investment offers a total return of 12 percent over the coming year. Janice Yellen thinks the total real return on this investment will be only 8 percent. What does Janice believe the inflation rate will be over the next year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)The two-year interest rate is 11.2% and the expected annual inflation rate is 5.6%. a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b-1. If the expected rate of inflation suddenly rises to 7.6%, what does Fisher’s theory say about how the real interest rate will change? multiple choice Real rate increases Real rate does not change Real rate decreases b-2. If the expected rate of inflation suddenly rises to 7.6%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)An investment will pay you $4,611.9 in 3 years if you pay $1,376.68 today. What is the implied rate of return? (Convert to a percent. Round to 2 decimal places.)
- Your financial planner offers you two different investment plans. Plan X is an annual perpetuity of $12,000 per year. Plan Y is an annuity for 11 years and an annual payment of $20,000. Both plans will make their first payment one year from today. At what discount rate would you be indifferent between these two plans? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16) Break-even rate: % please show excel formulas and answer breakdownYou know that the stated rate of return is not what you really earned. If the inflation rate last year was 4.5%, and your investment had a stated rate of 18%, what was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real return %(1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?
- Suppose you just bought an annuity with 12 annual payments of $15,700 at a discount rate of 11.75 percent per year. a. What is the value of the investment at the current interest rate of 11.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What happens to the value of your investment if interest rates suddenly drop to 6.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What happens to the value of your investment if interest rates suddenly rise to 16.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Present value at 11.75 percent b. Present value at 6.75 percent $ 124,187.88 153,795.59 c. Present value at 16.75 percent $ 97,472.81Suppose you just bought an annuity with 10 annual payments of $16,500 at a discount rate of 13.75 percent per year. a. What is the value of the investment at the current interest rate of 13.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What happens to the value of your investment if interest rates suddenly drop to 8.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What happens to the value of your investment if interest rates suddenly rise to 18.75 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Say you own an asset that had a total return last year of 11.5 percent. If the inflation rate last year was 6.5 percent, what was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real return % ( Prev 7 of 10 Next
- You invest $1,400 today and expect to sell your investment for $3,200 in 10 years. a-1. Calculate the present value of the future payoff, if the interest rate is 8%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) a-2. Is this a good deal? b-1. Calculate the present value, if the interest rate is 11%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b-2. Is this a good deal?Suppose you just bought an annuity with 11 annual payments of $16,400 at a discount rate of 13.5 percent per year. What is the value of the investment at the current interest rate of 13.5 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What happens to the value of your investment if interest rates suddenly drop to 8.5 percent? Note: Do not round intermediate calculations and roundSuppose we observe the following rates: 1R1 = 10%, 1R2 = 12%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(2r1)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)