The real rate of return is the actual rate of return after considering the factors that affect the rate of return like inflation.
Real rate of return = ((1+nominal rate)/(1+inflation rate))-1
Real rate of return = ((1+0.08)/(1+0.05))-1
Real rate of return = 0.02857
Real rate of return = 2.857%
Suppose that for the coming year inflation is forecast at an effective annual rate of r...
Suppose that for the coming year the force of inflation is forecast to be 4% and the force of interest is forecast to be 10%. Find the real rate of return. Round your answer to 3 decimal places.
Suppose that for the coming year the force of inflation is forecast to be 4% and the force of interest is forecast to be 10%. Find the real rate of return. Round your answer to 3 decimal places. Sorsone con lo he coming van de force of these are to be in and the core olime te to be done. Fosteren inte a return. Round your answer to 3 decimal place
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Suppose that there is compound interest at an annual inflation adjusted rate of 1.8% and that the annual rate of inflation is 2.6%. Find the force of interest corresponding to the stated rate of interest. (Round your answer to three decimal places.) 4.306 Find the inflation-adjusted force of interest corresponding to the real rate of interest. (Round your answer to three decimal places.) 1.784 x In general, what can you say about the difference between...
Yield Curves Suppose the inflation rate is expected to be 6.9% next year, 4.75% the following year, and 3.95% thereafter. Assume that the real risk-free rate, r, will remain at 1.55% and that maturity risk premiums on Treasury securities rise from zero on very short-term bonds (those that mature in a few days) to 0.2% for 1-year securities, Furthermore, maturity risk premiums increase 0.2% for each year to maturity, up to a limit of 1.0% on 5-year or longer-term T-bonds....
Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows on the 3-years...
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Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows...
Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows on the 3-years...
Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows on the 3-years...
Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows on the 3-years...
Suppose the real interest rate is 2.8%, and the inflation rate is 7%. (1) How much do you need to invest now in order to get $100 in a year? Please show two approaches to calculate the answers. (Round your final answer to two decimal places) (2) Suppose the U.S. Treasury issues 5% coupon, 3-year TIPS (Treasury Inflation-Protected Securities). What are the real cash flows on the 3-year TIPS each year? What are the nominal cash flows on the 3-years...