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A 8 Fisher Equation: i= r+ n° You have $10,000 in a bond fund with an average yield of 6%. Expected inflation over the life of your investment is 3%. What is the ex-ante real rate of return on this investment? r R C 1 D Fisher Equation: i- n² =r It л Fisher Equation: π = i-r 1 G r H 6.0% 3.0% 3.0% Aliens Bank economists have determined that the real yield on their mortgage portfolio is 2.7%. If the average interest rate on the bank's home loans is 5.4%, what can we infer about the expected rate of inflation? Fisher Equation: Fisher Equation: Fisher Equation: Fisher Equation: i=r+ n² i- n² =r i=r+nº r nº I nº r Ti-r Since 1926, US T Bond yields have averaged 5.5% and the consumer price index had a CAGR of 2.9 %. What is the long term real rate of return on T bonds? 2.7% 5.4% -2.7% r nº 2.9% 5.5% 8.4% Fisher Equation: Fisher Equation: π = i-r TL i-n²=r T Д It r

A 8 Fisher Equation: i= r+ n° You have $10,000 in a bond fund with an average yield of 6%. Expected inflation over the life of your investment is 3%. What is the ex-ante real rate of return on this investment? r R C 1 D Fisher Equation: i- n² =r It л Fisher Equation: π = i-r 1 G r H 6.0% 3.0% 3.0% Aliens Bank economists have determined that the real yield on their mortgage portfolio is 2.7%. If the average interest rate on the bank's home loans is 5.4%, what can we infer about the expected rate of inflation? Fisher Equation: Fisher Equation: Fisher Equation: Fisher Equation: i=r+ n² i- n² =r i=r+nº r nº I nº r Ti-r Since 1926, US T Bond yields have averaged 5.5% and the consumer price index had a CAGR of 2.9 %. What is the long term real rate of return on T bonds? 2.7% 5.4% -2.7% r nº 2.9% 5.5% 8.4% Fisher Equation: Fisher Equation: π = i-r TL i-n²=r T Д It r

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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016 7 9 0 A B i=r+ n² к C You have $10,000 in a bond fund with an average yield of 6%. Expected inflation over the life of your investment is 3%. What is the ex-ante real rate of return on this investment? r C D I E Fisher Equation: Fisher Equation: Fisher Equation: i- n² =r F πe=i-r Д i G e r 6.0% 3.0% 3.0% H Aliens Bank economists have determined that the real yield on their mortgage portfolio is 2.7%. If the average interest rate on the bank's home loans is 5.4 %, what can we infer about the expected rate of inflation? i=r+ne Fisher Equation: Fisher Equation: i- n² = r r L re M 1 IL 1 e r N O 2.7% 5.4% -2.7% P Since 1926, US T Bond yields have averaged 5.5% and the consumer price index had a CAGR of 2.9%. What is the long term real rate of return on T bonds? Fisher Equation: Fisher Equation: i=r+ n² π = i-r r Q TLⓇ i 2.9% 5.5% 8.4% Fisher Equation: Fisher Equation: in = r i IL r π = i-r
Transcribed Image Text:016 7 9 0 A B i=r+ n² к C You have $10,000 in a bond fund with an average yield of 6%. Expected inflation over the life of your investment is 3%. What is the ex-ante real rate of return on this investment? r C D I E Fisher Equation: Fisher Equation: Fisher Equation: i- n² =r F πe=i-r Д i G e r 6.0% 3.0% 3.0% H Aliens Bank economists have determined that the real yield on their mortgage portfolio is 2.7%. If the average interest rate on the bank's home loans is 5.4 %, what can we infer about the expected rate of inflation? i=r+ne Fisher Equation: Fisher Equation: i- n² = r r L re M 1 IL 1 e r N O 2.7% 5.4% -2.7% P Since 1926, US T Bond yields have averaged 5.5% and the consumer price index had a CAGR of 2.9%. What is the long term real rate of return on T bonds? Fisher Equation: Fisher Equation: i=r+ n² π = i-r r Q TLⓇ i 2.9% 5.5% 8.4% Fisher Equation: Fisher Equation: in = r i IL r π = i-r
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