Homework Answers
| Particulars | Year 1 | Year 2 | Rate of return |
| Financial asset value | 100.00 | 144.00 | |
| Financial asset value Post CPI * | 100.00 | 119.01 | 19% |
| * Calculation | |||
| Formulae | =144*130/157.3 | 119.01 |
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of two years, the nominal yalue of a financial asset increases o 144. Over the same...
help with question 29 thank you Deine and explain the three primary activities in the financial...
help with question 29 thank you
Deine and explain the three primary activities in the financial marke 28. Define and explain IPO underpricing and use the 'winner's curse" theory to explain why IPO underpricing occurs. (15 Marks) SECTIONC Answer ALL questions 29. Over a period of two years, the nominal value of a financial asset increases from 100 to 144. Over the same period, the Consumer Price Index (CP increases from 130 to 157.3 Calculate the annual real return over...
2. Consumer Price Index and Real Price Index: Over a four-year period, the prices of mangoes...
2. Consumer Price Index and Real Price Index: Over a four-year period, the prices of mangoes PM (in dollars) and the Consumer Price Index (CPI) are given below: Year CPI Price of Mangoes (PM) 1991 : cpi=94 , p=14 ; 1992: cpi=100 , p=15 ; 1993: cpi= 105 , p=16 ; 1994: cpi= 115 , p=17 2.1.Which year is the base year for CPI? Use this same base year for mangoes. 2.2.Calculate the nominal price index for mangoes. 2.3.Calculate the...
Suppose you invest $130,000 today and in 2 years have $200,000. At the time of your...
Suppose you invest $130,000 today and in 2 years have $200,000. At the time of your investment the Consumer Price Index (CPI) is 109. Assume that in 2 years the CPI is 186. (answer to two decimals, eg, 12.34%) a. What is your nominal annual rate of return? 1% b. What is your real annual rate of return? [% c. What is the average annual inflation rate? 90
problem 2 nominal vs real minimum wage PART II. PROBLEM: NOMINAL VS REAL (20 Marks) The...
problem 2 nominal vs real minimum wage
PART II. PROBLEM: NOMINAL VS REAL (20 Marks) The table below show the nominal minimum wage in BC for selected years and the corresponding consumer price index (CPI) for those years. Year Year Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 = 100) Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 - 100) 1976 1987 1990 1993 1995 1998 2000 3.00 4.00 5.00 6.00 6.50 26.2 57.8 65 9...
Answer the questions based on the relationship between real and nominal variables. Round answers to two...
Answer the questions based on the relationship between real and nominal variables. Round answers to two decimal places as needed. When Joe started his job at the laundromat five years ago, his wage was $6.00$6.00 an hour. Today, his wage is $7.00$7.00 an hour. If Joe started his job in the base year, and his real wage is the same as when he started, what is the Consumer Price Index (CPI) today? current CPI: The International Disc Jockey's Union has...
Calculate the nominal U.S. dollar rates of return to a Santa Barbara-based investor on the following...
Calculate the nominal U.S. dollar rates of return to a Santa Barbara-based investor on the following asset purchases. Assume that all of the SB investor's consumption takes place in the United States. a. A US$100,000 deposit in Banco Santander during a one-year period in which the /US$ exchange rate moved from 1.100 to 1.111 and the interest rate on euro deposits was 2.5 percent appreciated by 3 percent against the Hong Kong dollar c. A South Sea pearl necklace purchased...
please answer all question below 16. Suppose your annual income was $32,000 in 1998, and 33000...
please answer all question below
16. Suppose your annual income was $32,000 in 1998, and 33000 in 1999. If the 1998 CPI is 160 and 1999 CPI is 165, then you real income has: G. Gone up by 3% H. Not changed I. Declined by 5% J. Increased by 10% 13. If the CPI ignores product quality improvements, then the CPI tends to: C. Understand the inflation rate D. Overstate the inflation rate E. Understate economic growth F. Be artificially...
Calculate the nominal U.S. dollar rates of return to a Los Angeles-based investor on the following...
Calculate the nominal U.S. dollar rates of return to a Los Angeles-based investor on the following asset purchases. Assume that all of the LA investor’s consumption takes place in the United States. a. A US$100,000 deposit in Banco Santander during a one-year period in which the €/US$ exchange rate moved from 1.100 to 1.111 and the interest rate on euro deposits was 2.5 percent b. A Seattle office building that was purchased for US$100 million and sold for US$102 million during a...
Assume the average return on asset i over the prior 10 years was 10% with a...
Assume the average return on asset i over the prior 10 years was 10% with a volatility of 16%, and the risk-free rate over the same period was 2%. What is the best estimate of the: a. Risk-premium of asset i? b. Sharpe-ratio of asset i?
Score 44 years ago the maximum earings of a worker subject to Social Security tax (SST)...
Score 44 years ago the maximum earings of a worker subject to Social Security tax (SST) was $9,000. The maximum earnings subject to SST now is $118,500. What compound annual increase has been experienced over this 44-year period of timo? How does it compare with a 3% annual increase in the consumer price index over the same period of time? The compound annual increase in SST over 44 years is %. (Round to two decimal places.) The increase in SST...
help with question 29 thank you
Deine and explain the three primary activities in the financial marke 28. Define and explain IPO underpricing and use the 'winner's curse" theory to explain why IPO underpricing occurs. (15 Marks) SECTIONC Answer ALL questions 29. Over a period of two years, the nominal value of a financial asset increases from 100 to 144. Over the same period, the Consumer Price Index (CP increases from 130 to 157.3 Calculate the annual real return over...
Suppose you invest $130,000 today and in 2 years have $200,000. At the time of your investment the Consumer Price Index (CPI) is 109. Assume that in 2 years the CPI is 186. (answer to two decimals, eg, 12.34%) a. What is your nominal annual rate of return? 1% b. What is your real annual rate of return? [% c. What is the average annual inflation rate? 90
problem 2 nominal vs real minimum wage
PART II. PROBLEM: NOMINAL VS REAL (20 Marks) The table below show the nominal minimum wage in BC for selected years and the corresponding consumer price index (CPI) for those years. Year Year Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 = 100) Nominal Minimum Wage (5 per hour) Consumer Price Index (2014 - 100) 1976 1987 1990 1993 1995 1998 2000 3.00 4.00 5.00 6.00 6.50 26.2 57.8 65 9...
Calculate the nominal U.S. dollar rates of return to a Santa Barbara-based investor on the following asset purchases. Assume that all of the SB investor's consumption takes place in the United States. a. A US$100,000 deposit in Banco Santander during a one-year period in which the /US$ exchange rate moved from 1.100 to 1.111 and the interest rate on euro deposits was 2.5 percent appreciated by 3 percent against the Hong Kong dollar c. A South Sea pearl necklace purchased...
please answer all question below
16. Suppose your annual income was $32,000 in 1998, and 33000 in 1999. If the 1998 CPI is 160 and 1999 CPI is 165, then you real income has: G. Gone up by 3% H. Not changed I. Declined by 5% J. Increased by 10% 13. If the CPI ignores product quality improvements, then the CPI tends to: C. Understand the inflation rate D. Overstate the inflation rate E. Understate economic growth F. Be artificially...
Assume the average return on asset i over the prior 10 years was 10% with a volatility of 16%, and the risk-free rate over the same period was 2%. What is the best estimate of the: a. Risk-premium of asset i? b. Sharpe-ratio of asset i?
Score 44 years ago the maximum earings of a worker subject to Social Security tax (SST) was $9,000. The maximum earnings subject to SST now is $118,500. What compound annual increase has been experienced over this 44-year period of timo? How does it compare with a 3% annual increase in the consumer price index over the same period of time? The compound annual increase in SST over 44 years is %. (Round to two decimal places.) The increase in SST...
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