Imagine that the interest rate on one year deposit is 2,3% and an expected one year interest rate one year from now...

Question

Question

Answer 1

Answer #1

interest rate on 1 year deposit, 2.3% which means 100 rupees invested in deposit will be 100+(1+ 23) = 102. That amount when

Answer 2

Similar Homework Help Questions

Imagine that the interest rate on one year deposit is 2,3% and an expected one year...

Imagine that the interest rate on one year deposit is 2,3% and an expected one year interest rate one year from now is 5,4%? Based on these interest rates what would be an interest rate on two year deposit
5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and...

5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and the three-year interest rate is 2%. What is the expected one-year interest rate a year from now, and two years from, according to the expectations theory? b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates...
6.The current one-year Treasury bill rate is 4.2%. The expected one-year rate, one year from now...

6.The current one-year Treasury bill rate is 4.2%. The expected one-year rate, one year from now is 5.1%. According to the pure expectations theory, what should be today’s rate for a two-year Treasury security. Select one: a. 4.200% b. 4.649% c. 5.100% d. 3.050% e. 4.973% 15,Until the 1960's, limits on the interest rates that banks could pay to depositors had virtually no impact on the ability of banks to compete with other financial institutions to obtain funds because: Select...

b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the...

b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates is 0.4%. What is the expected one-year interest rate a year from now according to the liquidity premium theory?
Based on the Pure Expectations Theory of interest rates, if the one-year rate is 4%, and...

Based on the Pure Expectations Theory of interest rates, if the one-year rate is 4%, and the one-year rate, one year from now, is expected to be 10%, the current two-year rate should be Select one: a. 7.0 % b. 3.0% c. 6.0% d. 14.0%
Imagine you get approved for a one-year fixed interest rate loan with BB&T. The interest rate...

Imagine you get approved for a one-year fixed interest rate loan with BB&T. The interest rate of this loan is based on an expected inflation of 2%. However, one year later, the inflation rate increased to 3.5%. Does this news affect the real cost of your loan? How about BB&T? Are the bank real returns affected by this news? Essay Toolbar navigation More info

b. If the company makes the first deposit one year from now, how much should each...

b. If the company makes the first deposit one year from now, how much should each deposit be? 3. A start-up internet service provider expects to lose money in each of the first four years. Losses are projected to be $50 million in year one, $40 million in year two, $30 million in year three and $20 million in year four. An interest rate of 10% per year is used. a. What is the present worth of the losses for...
Using IFE, assume that the interest rate on a one-year insured home country bank deposit is...

Using IFE, assume that the interest rate on a one-year insured home country bank deposit is 6%, and the interest rate on a 1-year insured foreign bank deposit is 8%. For the actual returns of these two investments to be similar from the perspective of investors in the home country, the foreign currency would have to change over the investment horizon by the following percentage:
8-One year from now, you deposit $300 in a savings account. You deposit $1,800 the next...

8-One year from now, you deposit $300 in a savings account. You deposit $1,800 the next year. Then you wait two more years (until 4 years from now) and deposit $1,000. If your account always earns 6% annual interest and you make no withdrawals, how much will be in the account 11 years from now? 9-You deposit $5000 for 5 years at 4% annual interest. In 5 years, you add $15,000 to your account, but the rate on your account...

3. Using IFE, assume that the interest rate on a one-year insured home country bank deposit...

3. Using IFE, assume that the interest rate on a one-year insured home country bank deposit is 6%, and the interest rate on a 1-year insured foreign bank deposit is 8%. For the actual returns of these two investments to be similar from the perspective of investors in the home country, the foreign currency would have to change over the investment horizon by the following percentage: