A bank gives6-month 7.2% interest rate compounded monthly(the interest rate is that the bank applies to a client who deposits hismoney in the bank). This bank provides capital to investors with 22%annual loan interest rate.An investor who receives theloan from this bank wants to invest, expecting 10% annual real profit rate.Annual inflation rate is 14.6%. According to this; a.Determine monthly loan interest rate of the bank b.Find annual real profit rate of the bank c.Calculate the investor's annual compoundeddiscount (profit) rate. d.Calculate the annual realprofit rate of the depositor.
A bank gives6-month 7.2% interest rate compounded monthly(the interest rate is that the bank applies to a client who deposits hismoney in the bank). This bank provides capital to investors with 22%annual loan interest rate.An investor who receives theloan from this bank wants to invest, expecting 10% annual real profit rate.Annual inflation rate is 14.6%. According to this; a.Determine monthly loan interest rate of the bank b.Find annual real profit rate of the bank c.Calculate the investor's annual compoundeddiscount (profit) rate. d.Calculate the annual realprofit rate of the depositor.
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
Problem 1PS
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A bank gives6-month 7.2% interest rate compounded monthly(the interest rate is that the bank applies to a client who deposits hismoney in the bank). This bank provides capital to investors with 22%annual loan interest rate.An investor who receives theloan from this bank wants to invest, expecting 10% annual real profit rate.Annual inflation rate is 14.6%. According to this;
a.Determine monthly loan interest rate of the bank
b.Find annual real profit rate of the bank
c.Calculate the investor's annual compoundeddiscount (profit) rate.
d.Calculate the annual realprofit rate of the depositor.
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