Assume the inflation rate is 2.15 % APR, compounded annually. Would you rather earn a nominal return of 4.65 %APR, compounded semiannually, or a real return of 2.55 %APR, compounded quarterly? (Note: Be careful not to round any intermediate steps less than six decimal places.)
To put these on the same basis, you must convert them both to nominal EARs
The EAR for4.65 % APR, compounded semiannually is ____.
4.65% is already in nominal terms, hence calculation of EAR can be proceded,
EAR semi annually = [1 + r/2)^2 -1
= [1+ (.0465/2)]^2 - 1 = 4.704056%
Assume the inflation rate is 2.15 % APR, compounded annually. Would you rather earn a nominal...
Assume the inflation rate is 3.78% APR, compounded annually. Would you rather earn a nominal return of 5.03% APR, compounded semiannually, or a real return of 2.25% APR, compounded quarterly? (Note: Be careful not to round any intermediate steps less than six decimal places.) To put these on the same basis, you must convert them both to nominal EARS The EAR for 5.03% APR, compounded semiannually is (Type your answer in decimal format. Round to six decimal places.) The nominal...
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PLEASE ANSWER THIS QUESTION AND MOST ANSWER TO QUANTITATIVE PROBLEM THANKS YOU Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The -Select- v interest rate is quoted by borrowers and lenders, and it is...
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