Ans : Part 1 .
Option A, quoted interest rate
Part 2 , Option C, the nominal interest rate adjusted for inflation
Part 3, Option D, the relative change in the dollar value of an investment un adjusted for inflation.
Attempt 1/8 for 8 pts. Part 1 The nominal interest rate is also called the o...
Question 13 1 pts The nominal interest rate is 26%. The real rate is 8%. What is the inflation rate? O 34.00% O 16.67% O 18.00% 0 36.08% None of the above. 1 pts Question 14 Project ELI's only cash outflow is its cost of $16,000. The project has a net present value NPV of tonno Its profitability index (PVcash inflows PV cash outflows is
When the real rate of interest is less than the nominal rate of interest, then: A. inflation must be added to the nominal rate. B. investment returns do not increase purchasing power. C. nominal flows should be discounted with real rates. D. inflation is expected to occur.
Agree or disagree? 75 word reply A nominal interest rate measures the change in dollar amounts. It is quoted on bonds and loans. Nominal interest rate is simple; for example, if you borrow $1000 at a 5% interest rate, you can expect to pay $50 in interest without taking inflation into account. The con of using the nominal interest rate is the fact that it does not adjust for the inflation rate. Whereas a real interest rate does take inflation...
If you lend money at a 12% nominal interest rate, but you expect inflation to be 7% over the life of the loan, then you expect your purchasing power to grow at a rate of [1%. The real interest rate is negative when the nominal interest rate is If the nominal interest rate is 3% and the expected rate of inflation is 1%, then the real interest rate is ▼| the inflation rate. A. 2%. O B. 096. 3%. 1%....
If the inflation rate is 3% and the nominal interest rate is 8%, what is the real interest rate? Your answer is referred to as the real pre‐tax interest rate.
What is the real interest rate if the nominal interest rate is 8% and the expected inflation rate is10% over the course of a year?
What is the real interest rate if the nominal interest rate is still 8% but inflation is 1%? Does it cost more or less to borrow than when inflation was 3%?
Question 1 1.7 pts Whenever the expected inflation rate is positive The real interest rate is negative O the real interest rate is greater than the nominal interest rate O The nominal interest rate must be equal to the real interest rate The real interest rate is positive O None of the above
If a nominal interest rate is 8 percent, and inflation is 8 percent, then the real interest rate is: minus 2 percent. 16 percent. 0 percent. 8 percent.
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...