Real rates of return are inflation-adjusted rates of return.
Real rates of return consider time period's inflation rate. Real rates of return helps the investor to evaluate the true earning potential of the security, considering effects of inflation.
Question 10 1 pts rates of return are inflation-adjusted rates of return. I
Interest rates adjusted for the effects of inflation Group of answer choices are nominal variables; inflation is a real variable. and inflation are real variables. and inflation are nominal variables. are real variables; inflation is a nominal variable.
If the return of the investment is 8.20% and the inflation rate is 3.12%, what is the inflation-adjusted rate of return?
Question 1 (a) The rates of growth of money supply is 10%, of velocity of money circulation 1%, of real GDP 3%, what is the inflation rate? (b) The nominal interest rate is 7%, the inflation rate is 5%, what is the real interest rate?
Question 7 1 pts Predicable inflation has no costs associated with it. That is inflation is expected to be 2% and it turns out to be 2%, there would be no costs to people and firms in the economy. true false Question 8 1 pts In the postwar era, about how long is the average recession? 6 months 12 months 18 months 24 months Question 9 1 pts A new variable in this section is A. What is the best...
9) Twelve thousand dollars is invested today. If the annual inflation rate return on investment (constant dollars) (i) is 10%, what will be the approximate future value of the investment, adjusted for inflation (actual dollars), in five years? a) $25,800 b) $32,200 c) $42,000 d) $43,100 is 6% and the effective annual
Large-cap stocks had the nominal rates of return of 6.65 percent. The rate of inflation during the last year was 2.00 percent. What is the real rate of return for large-cap stocks? Round the answer to two decimal places in percentage form.
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Question 10 0.4 pts According to adaptive expectations theory, when inflation accelerates O people change to rational expectations. O people underestimate inflation. O people correctly estimate inflation. unemployment must increase. people overestimate inflation. Question 11 0.4 pts An increase in long-run aggregate supply can be expected to_the price evel and the natural rate of unemployment. Ohave no effect on; increase O decrease; have no effect on decrease: decrease Ohave no effect on; have no effect...
Large-cap stocks had the nominal rates of return of 13.10 percent. The rate of inflation during the last year was 3.89 percent. What is the real rate of return for large-cap stocks? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
Question 1: A banker must earn at least a 2.7% return after expected inflation on short term loans. The inflation rate for the past 6 months has averaged 3.5%. The expected inflation rate for the next twelve months is 7.3%. Nominal interest rates for short term loans were 7.1% last month. What is the minimum nominal interest rate that he should charge for a one year loan? Question 2: Fred bought a $1000 face value bond issued by Zest Corporation...
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Question 4 A particular security's equilibrium rate of return is 10% For all securities, the inflation risk premium is 2.75 percent and the real interest rate is 3 percent. The security's liquidity risk premium is 50 percent and maturity risk premium is .75 percent. The security has no special covenants. What is the security's default risk premium? Hint:i IP+RIR+ DRP+LRP+SCP+ MRP 2% 4% 5% 6% Question 5 1 pts Suppose we observe the following rates: 1R1-08, 1R2...