15) The nominal required return on XYZ stock is 14%. The nominal risk-free rate of return is 4% and the real risk-free rate of return is 26. How much are investors requiring as sompensation for risk? What is the inflation premium?
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- The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.X Corp would like to borrow from Y Corp. The risk free rate is 6% with current inflation rate of 2%. In the following year the inflation rate will increase by 1%. How much is the interest rate that Y should impose to X? A• 4% B• 6% C• 5% D• 7%Suppose in an economy PAE = 2500+.75Y-15000r. If target inflation is 2% and potential output is 5200, the central bank will set a nominal interest rate of % when the economy is at potential.
- If the rate of inflation is 5.7 %, what nominal interest rate is necessary for you to earn a 2.2 % real interest rate on yourinvestment?if the real interest rate is -2.5% and the nominal interest rate is 6% expected inflation equals1-)The rate is egual to the rate the rate ........ .... ............ Please select one or more option; a) real interest / nominal interest / minus/ inflation b) nominal interest / real interest/ minus/ inflation c) real interest / nominal interest / plus / inflation d) nominal interest / real interest / plus/ inflation e) inflation / nominal interest / minus /real interest 2-) Question: can be stopped with . policy changes that remove the need for . Please select one or more option; a) seigniorage / monetary / borrowing in the open market b) hyperinflations / fiscal / printing large quantities of money c) printing large quantities of money / monetary / taxes d) hyperinflations / fiscal / seigniorage e) open market operations / new tax/selling gold
- Suppose you have $200,000 in a bank term account. You earn 5% interest perannum from this account.You anticipate that the inflation rate will be 4% during the year. However, theactual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have andexamine the effects of inflation in your city of residence with attention to foodand accommodation expenses.2. The Australian Bureau of Statistics (ABS) reported in May 2017 that the civilianpopulation in Australia over 15 years of age was 20.8 million.Of this population of 20.8 million Australians, 13.5 million were employed and0.7 million were unemployed.Calculate Australia’s labor force and the number of people in the civilianpopulation who were not in the labor force? Also,Please no written by hand solutions After graduating from college in 2010, Art Major's starting salary is $ 40757.00 . Suppose Art Major has a cost of living adjustment (COLA) clause, or an escalator clause, in his labor contract so that he will be able to maintain this same level of purchasing power in real terms in 2011 and 2012. Using the information in the table, how much will Art Major earn in 2011 and 2012 if his salary keeps up with inflation? Round your answers to the nearest dollar. Year CPI 2010 103.77 2011 106.02 2012 108.04 What is Art Major's salary in 2011? $ What is Art Major's salary in 2012? $17. An engineer owns a design firm that generates $1 million per year in gross fees. The engineer calculates that the firm receive $100,000 per year in profits after paying all employee salaries, benefits, and other expenses. Assume zero inflation and no growth. If the expected rate of return is 10%, the fair market price of the firm is most nearly
- What are the benefits of inflation indexation in fixed income products? Why is it important for retirees? What is the cost for having inflation indexation as a product feature?Suppose you have $200,000 in a bank term account. You earn 5% interest perannum from this account.You anticipate that the inflation rate will be 4% during the year. However, theactual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have andexamine the effects of inflation inWhich lending agreement represents the highest real rate of return for a bank when it lends its money to a customer? A) a nominal interest rate of 11% with 5% inflation B) a nominal interest rate of 19% with 15% inflation C) a nominal interest rate of 8% with 1% inflation D) a nominal interest rate of 12% with 7% inflation