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Money market funds are yielding almost nothing Last month, the interest rate on a money fund...
(Real interest rates: approximation method) You are considering investing money in Treasury bills and wondering what...
(Real interest rates: approximation method) You are considering investing money in Treasury bills and wondering what the real risk-free rate of interest is. Currently, Treasury bills are yielding 5.6 % and the future inflation rate is expected to be 3.3 %) per year. Ignoring the cross product between the real rate of interest and the inflation rate, what is the real risk-free rate of interest? The real risk-free rate of interest is nothing____ %. (Round to one decimal place.)
ANSWER ALL. fiund is considering three mutual funds. The first is a stock fund, the second is money market fund yielding 1%. The probability a bond fund, and the third is a Exsciod Retcn 10% 5% 12...
ANSWER ALL.
fiund is considering three mutual funds. The first is a stock fund, the second is money market fund yielding 1%. The probability a bond fund, and the third is a Exsciod Retcn 10% 5% 12% Stock Fund (S) Bond Fund (B) The correlation between the fund returns is 0.10 (ie. negative). 30. Calculate the wcights on socks (mu) and bonds (m) associated with the Minimum b, (w-74% , w -26%) d. (we-28%, w-72%) the expected return for a...
PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $5.3 million investment fund. The...
PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $5.3 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 340,000 1.50 B 760,000 (0.50) C 1,300,000 1.25 D 2,900,000 0.75 If the market's required rate of return is 8% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. CAPM AND REQUIRED...
A company's 5-year bonds are yielding 8.05% per year. Treasury bonds with the same maturity are...
A company's 5-year bonds are yielding 8.05% per year. Treasury bonds with the same maturity are yielding 5.8% per year, and the real risk-free rate (r*) is 2.8%. The average inflation premium is 2.6%, and the maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. If the liquidity premium is 1.3%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places. %
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of...
Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.08 −36% −23% Mild recession 0.34 −6% 1% Normal growth 0.45 16% 5% Boom 0.13 40% 5% a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 2 decimal places and "Variance" to 4 decimal places.) Mean return % Variance b. Calculate the value of the covariance between...
Using the Taylor rule, calculate the target for the federal funds rate for July 2010 using the following information:
Using the Taylor rule, calculate the target for the federal funds rate for July 2010 using the following information: Equilibrium real federal funds rate 2% Target inflation rate 2% Current inflation rate 0.9% Output gap -6%The target for the federal funds rate for July 2010 is _______ %. (Enter your response rounded to two decimal places and include a minus sign if necessary) In your calculations, the inflation gap is negative if the current inflation rate is below the target inflation rate. How does the...
Suppose the money market annual yield (interest rate) is 1.50%. In the meantime, the one-year inflation...
Suppose the money market annual yield (interest rate) is 1.50%. In the meantime, the one-year inflation rate based on Consumer Price Index (CPI) was 2.0%. If the expected inflation rate remains the same for the next year, what is the expected real interest rate for the money market investment?
If you lend money at a 12% nominal interest rate, but you expect inflation to be...
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%....
You have $32,000 that you invested in two mutual funds last year. The first fund, the...
You have $32,000 that you invested in two mutual funds last year. The first fund, the International Fund, paid the equivalent of 6% simple interest. The second fund, the Real Estate fund, paid 4.5% simple interest. If the total earned in that year was $1755, how much did you invest in each account. Find the solution using only one variable as we did in the examples this week. Be sure you assign your variables (2 points!), show your work for...
The expected real rate of interest is 0.5%, actual inflation over the last year was -0.05%,...
The expected real rate of interest is 0.5%, actual inflation over the last year was -0.05%, and the nominal interest rate is currently 0.28%. According to the Fisher equation, what is the expected inflation (in %) over the next year, dPe? Round to 0.01%. E.g., if your answer is 3.145%, record it as 3.15
ANSWER ALL.
fiund is considering three mutual funds. The first is a stock fund, the second is money market fund yielding 1%. The probability a bond fund, and the third is a Exsciod Retcn 10% 5% 12% Stock Fund (S) Bond Fund (B) The correlation between the fund returns is 0.10 (ie. negative). 30. Calculate the wcights on socks (mu) and bonds (m) associated with the Minimum b, (w-74% , w -26%) d. (we-28%, w-72%) the expected return for a...
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%....
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