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Assume inflation is 0.21% per month. Would you rather earn a nominal return of 0.72% per month, compounded monthly, or a real return of 6.44% 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 0.72% per month is (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.44% 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.

Assume inflation is 0.21% per month. Would you rather earn a nominal return of 0.72% per month, compounded monthly, or a real return of 6.44% 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 0.72% per month is (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.44% 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.

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
Problem 1PS
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Assume inflation is 0.21% per month. Would you rather earn a nominal return is entered0.72% per month, compounded monthly, or a real return of 6.44% APR, compounded annually?  (Note: Be careful not to round any intermediate steps less than six decimal places.) The annual rate for the nominal return 0.72% 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 6.44% 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 ▼ nominal return compounded monthly real return compounded annually option over the ▼ nominal return compounded monthly real return compounded annually option.
Assume inflation is 0.21% per month. Would you rather earn a nominal return of 0.72% per month, compounded monthly, or a real return of 6.44% 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 0.72% per month is (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.44% 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 V option over the V option.
Transcribed Image Text:Assume inflation is 0.21% per month. Would you rather earn a nominal return of 0.72% per month, compounded monthly, or a real return of 6.44% 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 0.72% per month is (Type your answer in decimal format. Round to six decimal places.) The nominal annual rate for the real return of 6.44% 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 V option over the V option.
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