Suppose you hold $50,000 in a bank account that earns 1 percent interest over the year....
Suppose you hold $50,000 in a bank account that earns 1 percent interest over the year. The inflation rate was 2 percent. What happened to the purchasing power of the money in your bank account? Be specific.
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Suppose you hold $50,000 in a bank account that earns 1 percent
interest over the year....
Question 4 (8 pts): Suppose that you deposit $12,000 in a savings account that earns 7% in annually. Inflation is 2...
Question 4 (8 pts): Suppose that you deposit $12,000 in a savings account that earns 7% in annually. Inflation is 2.5%. a) What is the real interest rate? (2 pts) 5) How much money is in your account at the end of the year? (In nominal amount) (3 pt - What is the real purchasing power of that amount? (In real amount) (3 pts)
You read in a newspaper that the nominal interest rate is 12 percent per year in Canada and 8 percent per year in the U...
You read in a newspaper that the nominal interest rate is 12 percent per year in Canada and 8 percent per year in the United States. Suppose that international capital flows equalize the real interest rates in the two countries and that purchasing power parity holds. a. Using the Fisher equation, what can you infer about expected inflation in Canada and in the United States? b. What can you infer about the expected change in the exchange rate between the...
(1 point) A bank account earns 11 percent interest compounded continuously. At what (constant, continuous) rate...
(1 point) A bank account earns 11 percent interest compounded continuously. At what (constant, continuous) rate must a parent deposit money into such an account in order to save 100000 dollars in 13 years for a child's college expenses? rate = (dollars/year) If the parent decides instead to deposit a lump sum now in order to attain the goal of 100000 dollars in 13 years, how much must be deposited now? amount = (dollars)
If you deposit $500 in a bank account that earns 6 percent per year, how much...
If you deposit $500 in a bank account that earns 6 percent per year, how much total interest will you have earned after the third year? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
You want to be able to withdraw $50,000 each year for 20 years. Your account earns...
You want to be able to withdraw $50,000 each year for 20 years. Your account earns 10% interest. a) How much do you need in your account at the beginning? $ b) How much total money will you pull out of the account? $ c) How much of that money is interest?
Assume you just deposited $1,000 into a bank account. The interest rate on your deposit is...
Assume you just deposited $1,000 into a bank account. The interest rate on your deposit is 6% and inflation is expected to be 2% over the next year. What is the real interest rate you expect to earn on your deposit over the next year? How much money will you have on deposit at the end of one year? If you are saving to buy a new smartphone that currently sells for $1,050, will you have enough money to buy...
1. Suppose you invest $3,600 in an account bearing interest at the rate of 14 percent...
1. Suppose you invest $3,600 in an account bearing interest at the rate of 14 percent per year. What will be the future value of your investment in five years? 2. Your best friend won the state lottery and has offered to give you $11,100 in five years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 12 percent annual interest. What is the present value of...
You lent $370 to a friend for one year at a nominal rate of interest of...
You lent $370 to a friend for one year at a nominal rate of interest of 3 percent. Inflation during that year was 2 percent. Did you experience an increase or decrease in the purchasing power of your money? How much did it increase or decrease? (Round answer to 2 decimal places, e.g. 52.75%.) The purchasing power ______(increasing or decreasing) by ____%. If the nominal rate of interest is 4.19 percent and the expected rate of inflation is 1.76 percent,...
Chapter Four: Q4: Assume you just deposited $1,250 into a bank account. The current real interest...
Chapter Four: Q4: Assume you just deposited $1,250 into a bank account. The current real interest rate is 1% and the inflation is expected to be 5% over the next year. What nominal rate would you require from the bank over the next year? How Much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,300, will you have enough money to buy it? Chapter Five:...
Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 5.75 percent. Over...
Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 5.75 percent. Over the next two years, the real interest rate is expected to be 3.06 percent per year and the inflation premium is expected to be 2.06 percent per year. What is the maturity risk premium on the 2-year Treasury security? 1.15% 1.00% .63% 5.12%
Question 4 (8 pts): Suppose that you deposit $12,000 in a savings account that earns 7% in annually. Inflation is 2.5%. a) What is the real interest rate? (2 pts) 5) How much money is in your account at the end of the year? (In nominal amount) (3 pt - What is the real purchasing power of that amount? (In real amount) (3 pts)
(1 point) A bank account earns 11 percent interest compounded continuously. At what (constant, continuous) rate must a parent deposit money into such an account in order to save 100000 dollars in 13 years for a child's college expenses? rate = (dollars/year) If the parent decides instead to deposit a lump sum now in order to attain the goal of 100000 dollars in 13 years, how much must be deposited now? amount = (dollars)
1. Suppose you invest $3,600 in an account bearing interest at the rate of 14 percent per year. What will be the future value of your investment in five years? 2. Your best friend won the state lottery and has offered to give you $11,100 in five years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 12 percent annual interest. What is the present value of...
Chapter Four: Q4: Assume you just deposited $1,250 into a bank account. The current real interest rate is 1% and the inflation is expected to be 5% over the next year. What nominal rate would you require from the bank over the next year? How Much money will you have at the end of one year? If you are saving to buy a fancy bicycle that currently sells for $1,300, will you have enough money to buy it? Chapter Five:...
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