n = 21 (Question 3) If the inflation rate is (6+2n)% per year and the market...
3) (15 points) A local credit union pays a market interest rate of 5% per year for long-term deposits. The current inflation rate is 2% per year. a) (5 points) If I invest some money in a long-term fund at the credit union, what is the real (inflation- free) interest rate I will be earning? b) (10 points) I open a new account today, deposit $10,000, and do not expect to make any deposits or withdrawals for the next 5...
assume the inflation rate 6% per year and the real interest rate is 5%. A)the number of future dollars after 5 years that will be equivalent to 30000 calculating first real dollar equivalence (constant value dollars) B) The number of future dollars after 5 years that will be equivalent 30000 market interest rate ?
QUESTION 10 The average inflation is 3.0009% per year. The required interest-free interest rate is 12.000% per year. Determine the market interest rate in this situation, assuming that compounding occurs annually OCC Enter your result as a percentage rounded to 2 decimal places without the 96 symbol. [For example, 3.075489% would be entered as 3.08] QUESTION 5 The recent 3-year inflation rate: Y1 3.500% Y2 5.750% 6.000% Y3 Determine the average inflation rate over the 3 year span. Enter your...
Calculate the inflation-adjusted interest rate when the annualized inflation rate is 77% per year and the real interest rate is 3.5% per year. The inflation-adjusted interest rate is %
Calculate the inflation-adjusted interest rate when the annualized inflation rate is 7.1% per year and the real interest rate is 2.7% per year. The inflation-adjusted interest rate is____ %.
6. Let real GDP growth-2.4% per year, money growth-5% per year, nominal interest rate 4.8% and velocity of money-constant. (a) Find the inflation rate, the real interest rate, and the cost of holding money. (b) What are the inflation rate, the real interest rate, and the cost of holding money if the central bank changes the money growth to 6% per year? 2. An economy produces 5 goods. The quantities produced and the prices of the 5 goods in year...
6-3: The Determinants of Market Interest Rates Expected Interest Rate The real risk-free rate is 3.5%. Inflation is expected to be 296 this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero. a. What is the yield on 2-year Treasury securities? Round your answer to two decimal places. places
The real risk-free rate is 2%, and inflation is expected to be 3% this year, 4% in year 2, 5% in year 3 and then 3.5% thereafter. The maturity risk premium is estimated to be 0.50x(t-1), where t=number of years to maturity. What is the nominal interest rate on a 15-year Treasury security?
Consider an economy with the following Money market information. Is the past year inflation rate was 4%, the output grew by 5%, and the nominal interest rate on non-monetary assets grew by 2.5%. Moreover, we know that the central bank of this economy increased the Money supply of economy by 6%. As an economist you know that the interest elasticity of Money demand of this economy is -0.2. However, you don’t have any information about the income elasticity of Money...
6-3: The Determinants of Market Interest Rates Expected Interest Rate The real risk-free rate is 2.1%. Inflation is expected to be 2.35% this year, 4.45% next year, and then 2.75% thereafter. The maturity risk premium is estimated to be 0.05(t- 1)%, where t-number of years to maturity. What is the yield on a 7-year Treasury note? Round your answer to two decimal places.