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Assume inflation is 0.16% per month. Would you rather earn a nominal return of 0.79% per month, compounded monthly, or a real return of 6.48% APR, compounded annually?   (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return of 0.79% per month is _____. (Type your answer in decimal format. Round to six decimal places.) Part 2 The nominal annual rate for the real return of 6.48% APR is _____. (Type your answer in decimal format. Round to six decimal places.) Part 3 (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the (real return or nominal return) option over the (real return or nominal return) option.

Assume inflation is 0.16% per month. Would you rather earn a nominal return of 0.79% per month, compounded monthly, or a real return of 6.48% APR, compounded annually?   (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return of 0.79% per month is _____. (Type your answer in decimal format. Round to six decimal places.) Part 2 The nominal annual rate for the real return of 6.48% APR is _____. (Type your answer in decimal format. Round to six decimal places.) Part 3 (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the (real return or nominal return) option over the (real return or nominal return) option.

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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Assume inflation is 0.16% per month. Would you rather earn a nominal return of 0.79% per month, compounded monthly, or a real return of 6.48% APR, compounded annually?   (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return of 0.79% per month is _____. (Type your answer in decimal format. Round to six decimal places.) Part 2 The nominal annual rate for the real return of 6.48% APR is _____. (Type your answer in decimal format. Round to six decimal places.) Part 3 (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the (real return or nominal return) option over the (real return or nominal return) option.
Assume inflation is 0.16% per month. Would you rather earn a nominal return of 0.79% per month, compounded monthly, or a real return of 6.48% APR, compounded annually? (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return of 0.79% per month is . (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.48% APR is (Type your answer in decimal format. Round to six decimal places.) (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the option over the option.
Transcribed Image Text:Assume inflation is 0.16% per month. Would you rather earn a nominal return of 0.79% per month, compounded monthly, or a real return of 6.48% APR, compounded annually? (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return of 0.79% per month is . (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.48% APR is (Type your answer in decimal format. Round to six decimal places.) (Select from the drop-down menus.) Based on a comparison of the two rates and the current inflation rate, you would prefer the option over the option.
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