1.Suppose the nominal rate is 15.62% and the inflation rate is 2.37%. What is the real...
1.Suppose the nominal rate is 15.62% and the inflation rate is 2.37%. What is the real rate? Use the Fisher Equation to get the answer.Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box.
2.ABC, Inc., has a beta of 1.19. The risk-free rate is 2.91% and the market risk premium is 7.89%. What is the required rate of return on ABC's stock?Note: Convert your answer to percentage and round off to two decimal points.
Homework Answers
Nominal rate= 15.62%
inflation rate = 2.37%
real rate = ((1+nominal rate)/(1+inflation
rate))-1
((1+15.62%)/(1+2.37%))-1
0.129432 or
12.94%
So real rate is 12.94%
Note : separate first question is Answered as HOMEWORKLIB policy
Add Answer to:
1.Suppose the nominal rate is 15.62% and the inflation rate is
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ABC, Inc., has a beta of 1.19. The risk-free rate is 2.91% and the market risk premium is 7.89%. What is the required rate of return on ABC's stock?Note: Convert your answer to percentage and round off to two decimal points.
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