Considering the idea of the real rate of interest, ir. In which of the following situations...
Considering the idea of the real rate of interest, ir. In which of the following situations would you prefer to be the lender?
a. The interest rate is 9 percent and the expected inflation rate is 7 percent.
b. The interest rate is 4 percent and the expected inflation rate is 1 percent.
c. The interest rate is 13 percent and the expected inflation rate is 15 percent.
d. The interest rate is 25 percent and the expected inflation rate is 50 percent.
Homework Answers
"B"
Real interest rate = nominal rate - inflation, in option B interest rate is 4% and the expected inflation is only 1% that will ensure a return of 3% which is highest in the given options.
Add Answer to:
Considering the idea of the real rate of interest,
ir. In which of the following situations...
4. What is the value of the real interest rate in each of the following situations?...
4. What is the value of the real interest rate in each of the following situations? a. The nominal interest rate is 15%, and the expected inflation rate is 13%. b. The nominal interest rate is 12%, and the expected inflation rate is 9%. c. The nominal interest rate is 10%, and the expected inflation rate is 9%. d. The nominal interest rate is 5%, and the expected inflation rate is 1%. e. In which of the above situations would...
B) 5 pend an anual interest payment of $25, the interest rate is B) 5 percent....
B) 5 pend an anual interest payment of $25, the interest rate is B) 5 percent. 31) 31) If D) 10 percent A) 2.5 percent a price of $500 and an annual interest C)7.5 percent. 32) 32) If the interest rates on all bonds rise from 5 would you prefer to have been holding? B) a bond with ten years to maturity with one year to maturity percent over the course of the year, which bonc A) a bond with...
In which of the following situations would you prefer to be borrowing? a) the interest rate...
In which of the following situations would you prefer to be borrowing? a) the interest rate is 6% and the expected inflation rate is 6% b) the interest rate is 5% and the expected inflation rate is 3% c) the interest rate is 7% and the expected inflation rate is 13% d) the interest rate is 11% and the expected inflation rate is 2% Please explain. Thank you : )
Previous Page Next Page Page 3 of 26 Question 3 (1 point) In which of the...
Previous Page Next Page Page 3 of 26 Question 3 (1 point) In which of the following situations would you prefer to be giving out a loan? The interest rate is 4 percent and the expected inflation rate is 1 percent. The interest rate is 9 percent and the expected inflation rate is 7 percent. The interest rate is 3 percent and the expected inflation rate is 4 percent. The interest rate is 8 percent and the expected inflation rate...
10. Consider the situations of a lender of money and a borrower of money. Which of...
10. Consider the situations of a lender of money and a borrower of money. Which of the following situations is least burdensome for the borrower? a. nominal interest rate of 15% and an inflation rate of 8% b. nominal interest rate of 10% and an inflation rate of 1% c. nominal interest rate of 8% and an inflation rate of 2% d. nominal interest rate of 4% and an inflation rate of 4% e. nominal interest rate of 29% and...
10) Interest rates typically display a A) countercyclical pattern B) cyclically neutral C) procyclical D) random...
10) Interest rates typically display a A) countercyclical pattern B) cyclically neutral C) procyclical D) random 11). Which if the following would you prefer to be buying based on yield to maturity (assume n = 25)? A) A $10,000 par value security with a 9% coupon rate selling for $9,000 B) A $15,000 par value security with a 7% coupon rate selling for $15,700 C) A $20,000 par value security with a 9% coupon rate selling for $20,500 D) A...
If a lender charge a 9% nominal interest rate and expected inflation rate is a 4%,...
If a lender charge a 9% nominal interest rate and expected inflation rate is a 4%, what is the difference between the real rate the lender received and the real rate the lender expected when the actual inflation ended up being 2%
In which situation is the real interest rate highest? A) The nominal interest rate is 25%...
In which situation is the real interest rate highest? A) The nominal interest rate is 25% and the inflation rate is 30% B) The nominal interest rate is 2% and the inflation rate is 1% C) The nominal interest rate is 8% and the inflation rate 5% D) The nominal interest rate is 11% and the inflation rate 9% Please provide explanation thanks
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
4. What is the value of the real interest rate in each of the following situations? a. The nominal interest rate is 15%, and the expected inflation rate is 13%. b. The nominal interest rate is 12%, and the expected inflation rate is 9%. c. The nominal interest rate is 10%, and the expected inflation rate is 9%. d. The nominal interest rate is 5%, and the expected inflation rate is 1%. e. In which of the above situations would...
B) 5 pend an anual interest payment of $25, the interest rate is B) 5 percent. 31) 31) If D) 10 percent A) 2.5 percent a price of $500 and an annual interest C)7.5 percent. 32) 32) If the interest rates on all bonds rise from 5 would you prefer to have been holding? B) a bond with ten years to maturity with one year to maturity percent over the course of the year, which bonc A) a bond with...
Previous Page Next Page Page 3 of 26 Question 3 (1 point) In which of the following situations would you prefer to be giving out a loan? The interest rate is 4 percent and the expected inflation rate is 1 percent. The interest rate is 9 percent and the expected inflation rate is 7 percent. The interest rate is 3 percent and the expected inflation rate is 4 percent. The interest rate is 8 percent and the expected inflation rate...
10. Consider the situations of a lender of money and a borrower of money. Which of the following situations is least burdensome for the borrower? a. nominal interest rate of 15% and an inflation rate of 8% b. nominal interest rate of 10% and an inflation rate of 1% c. nominal interest rate of 8% and an inflation rate of 2% d. nominal interest rate of 4% and an inflation rate of 4% e. nominal interest rate of 29% and...
10) Interest rates typically display a A) countercyclical pattern B) cyclically neutral C) procyclical D) random 11). Which if the following would you prefer to be buying based on yield to maturity (assume n = 25)? A) A $10,000 par value security with a 9% coupon rate selling for $9,000 B) A $15,000 par value security with a 7% coupon rate selling for $15,700 C) A $20,000 par value security with a 9% coupon rate selling for $20,500 D) A...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Most questions answered within 3 hours.
-
Foreman company obtained a $20,000, 6% loan on May 1, 2018.
Principal and interest will be...
asked 41 seconds ago -
5. Problem 11.05 (Discounted Payback)
eBook
Project L costs $60,000, its expected cash inflows are $14,000
per...
asked 28 minutes ago -
1. Which of the following is true about politics and health
organizations?
A. Health organizations are...
asked 53 minutes ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 1 hour ago -
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 1 hour ago -
A three-year maturity bond with a 12% annual coupon rate is
currently traded at par $1000...
asked 1 hour ago -
1.
What is the minimum volume to use in the Spec 20 cuvette in order
to...
asked 2 hours ago -
A builder wants to install wall-to-wall carpeting in a living
room of length 8.87 m and...
asked 2 hours ago -
Organizational change can produce anxiety in those affected by
the change. In what ways can change...
asked 2 hours ago -
Ozone in the atmosphere may react with nitric oxide.
From the following data, calculate the DG...
asked 2 hours ago -
Steven Long, a bond analyst, is analyzing a convertible bond.
The characteristics of the bond are...
asked 2 hours ago -
Michael Bordellet is
the owner/pilot of Stellar Air Service. The company flies a daily
round trip...
asked 2 hours ago