An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2 percent. Which statement (s) below is true ? i 4 percent is the desired real risk free interest rate. ii. 6 prevéis the approximate nominal rate of interest required. iii. 2 percent is the expected inflation rate over the period I. only ? I I only ? iii only ? i and ii only ?
An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2 percent. Which statement (s) below is true ? i 4 percent is the desired real risk free interest rate. ii. 6 prevéis the approximate nominal rate of interest required. iii. 2 percent is the expected inflation rate over the period I. only ? I I only ? iii only ? i and ii only ?
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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An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period prices are expected to rise by 2 percent. Which statement (s) below is true ?
i 4 percent is the desired real risk free interest rate.
ii. 6 prevéis the approximate nominal rate of interest required.
iii. 2 percent is the expected inflation rate over the period
I. only ?
I I only ?
iii only ?
i and ii only ?
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