Answered: In 2020, price index is 135.4 and in…

Name: In 2020, price index is 135.4 and in 2021 price index is 145.2.What is
Uploaded: 2022-11-18T00:26:58.000Z
Channel: Bartleby
Description: In 2020, price index is 135.4 and in 2021 price index is 145.2.What is the inflation rate?Select one:a. 107.24%b. -6.75%c. 7.24%d. 9.80%

Business

Finance

In 2020, price index is 135.4 and in 2021 price index is 145.2. What is the inflation rate? Select one: a. 107.24% b. -6.75% c. 7.24% d. 9.80%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 2IEE

See similar textbooks

Related questions

Q: Suppose the real rate is 8 percent and the inflation rate is 2.4 percent. What rate would you expect…

A: As per fisher equation (1+ return on treasury/required return) = (1+real rate) *(1+ inflation rate…

Q: At an annual inflation rate of 7.2%, how long will it take the Consumer Price Index (CPI) to double?

A: Assuming that CPI is equal to C0.

Q: what should the nominal rate of interest be?

A: Nominal interest rate (NIR) refers to a interest rate which an investor is expect from his…

Q: The risk-free rate is 2.9%, and expected inflation is 2.1%. If inflation expectations change such…

A: Risk free rate:The risk-free rate is crucial in finance and economics as it helps determine the…

Q: Suppose the real rate is 8.5 percent and the inflation rate is 2.8 percent. What rate would you…

A: We will use the below formula to calculate the return on Treasury billReturn on Treasury bill =…

Q: Suppose that the US price index is 100.0 in 1985 and 216.4 in 2015 (30 years). What is the average…

A: Here, US Price Index in 1985 is 100 US Price Index in 2015 is 216.4 Time Period is 30 years

Q: Assume AUD = 0.58 GBP and inflation is 3.5% pa in Australia and 7% pa in Great Britain. Estimate the…

A: Exchange rate depends on the inflation rate and changes based on the inflation in the home country…

Q: Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47% 8.53% 2…

A: Average return is the sum of the all return dividend by the number of years.…

Q: DE HIE HIF = PH - PF EHIF EH/F=0.7341 TT F= 3% EHF=0.7361 country. denotes the growth rate in price…

A: The above given formula is from Relative Purchasing Power Parity which states the relationship…

Q: 69. Consumer Price Index (a) The CPI was 163.0 for 1998 and 215.3 for 2008. Assuming that annual…

A: CPI in Year 1998 = 163.0 CPI in Year 2008 = 215.3 So CPI grows 52.3 (215.3-163) in 10 (2008-1998)…

Q: stimate inflation based on the following data: Round your answer to the nearest basis point…

A: Inflation is an increase in the prices of goods and services and this may be due to demand and…

Q: 31. The price index was 220 in one year and 260 in the next year. What was the inflation rate? a.…

A: Inflation refers to the rate at which the prices of goods in a market rise over a given period. It…

Q: What is the (exact) nominal return on an investment that earns a real return of 14.7% while…

A: Solution:- Nominal rate of return means the rate of return inclusive the effect of inflation.

Q: Suppose the real rate is 7 percent and the inflation rate is 2.6 percent. What rate would you expect…

A: concept. (1+Rf) = (1 + RR) * (1+IR) where , Rf = risk free rate RR =real rate IR = inflation rate

Q: If the inflation rate is 6%, cost of money is 10%, what interest rate will take care of inflation…

A: Nominal Interest Rate: This percentage increase in the amount of money you pay the lender in…

Q: a. In Year 1 the CPI was 100; 30 years later, it was 239. What was the annual rate of inflation?…

A: Inflation happens when the prices of goods and services grow over time, reducing a currency's buying…

Q: 2014 2018 2019 178 194.3 200.8 a. What is the economy's annual inflation rate for 2019? (Do not…

A: Inflation rate:The inflation rate is an important economic indicator that reflects the erosion of…

Q: Assume that the base year is 2015. Good 2015 Price 2015 Quantity 2016 Price 2016 Quantity $2 250 $3…

A: Formula used for calculating CPI:-

Q: 1. The price of an item in 2004 was $1.3. Use an inflation rate of 4% to calculate its price in…

A: According to the time value of money concept, the value of money in the future will be less worth as…

Q: If the market interest rate is 16% and the inflation rate is 10%, determine the real interest rate.…

A: Market interest rate = 0.16 Inflation rate = 0.10

Q: Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per…

A: Fisher equation is a equation that on the basis of effect of inflation, it finds out the…

Q: Inflation in log is 5.0430853%. If the last year’s price level was 610, what is this year’s price…

A: An inflation rate is defined as the increase or decrease percentage in the prices at the specified…

Q: Using the returns shown above, calculate the arithmetic average returns, the variances, and the…

A: Following are the formulas: Arithmetic average return = (Sum of all observations/Number of…

Q: Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per…

A: Fisher equation: real rate of return=1+nominal rate1+inflation-1

Q: If the expected inflation rate is 3.45%, the realized real rate of return is 3.80%, and the actual…

A: Expected Inflation Rate is 3.45% Realized Real Rate of Return is 3.80% Actual Inflation Rate is…

Q: Nominal rates are currently 5.96%, and the estimate of expected inflation is 3.45%. Use the…

A: The precise Fisher equation is given by1+i=(1+r)(1+π)Where:i is the nominal interest rate,r is the…

Q: An analyst gathered the following year-end price level data for an economy: 2014 2018 2019 191 207.3…

A: Year Price Level 2014 191 2018 207.3 2019 213.8

Q: In Oman, the price index in 1985 is 88.1, and the price index in 2005 is 182.9. What is the average…

A: CAGR = [ Price index in end period / Price index in opening period ]1/period - 1

Q: You observe a nominal rate of 5.48% at the same time you learn that the inflation rate is 2.68%.…

A: Nominal rate = 5.48% Inflation rate = 2.68%

Q: What exact real rate of return is implied by a nominal return of 6% and an inflation rate of 2.4%…

A: Nominal rate = 6% Inflation rate = 2.4%

Q: Suppose the real rate is 8.5 percent and the inflation rate is 2 percent. What rate would you expect…

Q: Using a market interest rate of 6% and an inflation rate of 2.5%, calculate the future equivalent in…

A: The future value of the cash flow is the future worth of a cash flow at a certain rate of interest…

Q: Consider the following table for an eight-year period: Year 12345678 T-bill return Inflation 7.40%…

A: Standard deviation refers to the dispersion of data from its mean value defines high standard…

Question

Practice Pack

OFFON

In 2020, price index is 135.4 and in 2021 price index is 145.2.
What is the inflation rate?

Select one:

a. 107.24%

b. -6.75%

c. 7.24%

d. 9.80%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

Includes step-by-step video

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Learn your way

Includes step-by-step video

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

same table - using the CPI method, calculate inflation/deflation from 2020 to 2022: CPI Method P*Q+P*Q year Pizza Q Pizza P Shoes Q Shoes P 2020 10 $ 10.00 7 $125.00 2021 12 $ 11.00 11 $150.00 2022 13 $ 12.00 8 $100.00 -0.1540 ○ 0.1540 -0.1590 ○ 0.1590 -0.1595 0.1595 Question 4 Using the table below, calculate the GDP deflator for 2023 year Burkin Bag Burkin Price Nikes Nikes Price 2019 3 $ 100.00 10 $ 125.00 2020 4 $ 200.00 11 $ 110.00 BASE YEAR 2021 2 $ 140.00 12 $ 135.00 2022 3 $ 125.00 10 $ 120.00 2023 4 $ 175.00 11 $ 150.00 -.1113 ○ .2914 ○ .8898 ○ 1.078 ○ 1.149
In Oman, the price index in 1985 is 88.1, and the price index in 2005 is 182.9.What is the average inflation rate for this period? Select one: a. 44.09 % b. 3.72 % c. 107.60 % d. -3.59 %
If the expected inflation rate is 3.45%, the realized real rate of return is 3.80%, and the actual inflation rate is 2.15%, what is the required real rate of return? а. 1.45% b. 2.50% С. 5.60% d. 2.35%
What is the (exact) nominal return on an investment that earns a real return of 14.7% while inflation is 7.4%? Enter your response, in percent (%), correct to TWO decimal places.
What exact real rate of return is implied by a nominal return of 6% and an inflation rate of 2.4% over the same time period?(please write answer in a decimal format using 5 decimal places)
Nominal rate of return is 10.80%. Inflation rate is 6.95%. What is the real rate of return as per Fisher equation? a) 4.80% b) 17.75% c) 6.95% d) 3.60%
Suppose that the US price index is 100.0 in 1985 and 216.4 in 2015 (30 years). What is the average annual rate of inflation from 1985 and 2015 in the US? 2.61% 116.4% 16.4% 1.64% None of the above
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%
The risk-free rate is 2.9%, and expected inflation is 2.1%. If inflation expectations change such that future expected inflation falls to 1.7%, what will the new risk-free rate be? The new risk-free rate is %. (Round to one decimal place.)
If the market interest rate is 16% and the inflation rate is 10%, determine the real interest rate. O 5.45% O 26% O 16.63% O6.84%
69. Consumer Price Index (a) The CPI was 163.0 for 1998 and 215.3 for 2008. Assuming that annual inflation remained constant for this time period, determine the average annual inflation rate. (b) Using the inflation rate from part (a), in what year will the CPI reach 300?
Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions. a. In Year 1 the CPI was 100; 30 years later, it was 239. What was the annual rate of inflation? Round your answer to the nearest whole number. %