If Treasury bills are currently paying 6 percent and the inflation rate is 2.3 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate real rate % Exact real rate %

If Treasury bills are currently paying 6 percent and the inflation rate is 2.3 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate real rate % Exact real rate %

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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Similar questions

Suppose the real rate is 7 percent and the inflation rate is 2.6 percent. What rate would you expect to see on a Treasury bill? Multiple Choice O O 11.25% 10.76% 9.78% 8.80% 8.31%
Assume an effective compound interest rate i = 5% per annum. Compute the following equivalent rates. In each case, enter your answer as a percentage. a) The nominal interest rate payable semi-annually Number % Enter an answer correct to 4 decimal places. b) The effective interest rate payable quarterly Number % Enter an answer correct to 2 decimal places. c) The effective rate of discount per annum Number % Enter an answer correct to 2 decimal places. d) The nominal rate of discount payable monthly Number % Enter an answer correct to 4 decimal places.
Q)The Central Bank pays 3.6% compounded monthly on certain types of deposits. What is the effective annual rate of interest? Note:- you will keep all 8 decimal places when performing calculations, express your final answer in percentage with 8 decimal places, and there is no need to include any symbols such as % in your final answer.
8-7
Find the equivalent interest rates to the given nominal interest rates. a. Nominal interest rate compounded quarterly that is equivalent to an effective interest rate of 8% . 144.20% 1.94% 36.05% 7.77% b. Nominal interest rate compounded monthly that is equivalent to 3.5% compounded quarterly. 31.78% 2.65% 3.49% 0.29% c. Nominal interest rate compounded monthly that is equivalent to 6% compounded annually. 5.84% 1,214.64% 0.49% 101.22%
(Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 6.8 percent? The nominal rate of interest would be %. (Round to two decimal places.)
Treasury bills are currently paying 7 percent and the inflation rate is 3.8 percent. What is the approximate real rate of interest? What is the exact real rate? Round your answer to 2 decimal places.
For compounding more frequently than annual, the effective interest rate Select one: a. is higher than the nominal rate b. is lower than the nominal rate c. depends on the amount borrowed 18 d. equal to the nominal rate
Find the effective rate of interest corresponding to a nominal rate of 5.5% compounded seminannually. Answer choices: 5.645% 5.91% 5.558% 5.569%
Not use excel
The real rate is 4 percent and the inflation rate is 5.6 percent. What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
if effective interest rate is i = 5.7%, calculate i^(12) correct answer is 5.556%pa (no tables, only formulas please)

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