You currently have $200 in the bank which pays a 5% pa interest rate. Apples currently cost $1 each at the shop and the inflation rate is -6% pa (note the negative sign) which is the expected growth rate in the apple price. All rates are given as effective annual rates. Which of the below statements is NOT correct? All answer options are rounded to 6 decimal places. Select one: a. In 3 years the nominal apple price will be $1.393748. b. The real growth rate in the apple price is expected to be 0% pa. c. In 3 years your money in the bank will be worth $231.525 in nominal terms. d. In 3 years your money in the bank will be worth $278.74965 in real terms. e. The real bank interest rate is 11.702128 % pa.
You currently have $200 in the bank which pays a 5% pa interest rate. Apples currently cost $1 each at the shop and the inflation rate is -6% pa (note the negative sign) which is the expected growth rate in the apple price. All rates are given as effective annual rates. Which of the below statements is NOT correct? All answer options are rounded to 6 decimal places. Select one: a. In 3 years the nominal apple price will be $1.393748. b. The real growth rate in the apple price is expected to be 0% pa. c. In 3 years your money in the bank will be worth $231.525 in nominal terms. d. In 3 years your money in the bank will be worth $278.74965 in real terms. e. The real bank interest rate is 11.702128 % pa.
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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You currently have $200 in the bank which pays a 5% pa interest rate. Apples currently cost $1 each at the shop and the
inflation rate is -6% pa (note the negative sign) which is the expected growth rate in the apple price. All rates are given as
effective annual rates. Which of the below statements is NOT correct? All answer options are rounded to 6 decimal places.
Select one:
a. In 3 years the nominal apple price will be $1.393748.
b. The real growth rate in the apple price is expected to be 0% pa.
c. In 3 years your money in the bank will be worth $231.525 in nominal terms.
d. In 3 years your money in the bank will be worth $278.74965 in real terms.
e. The real bank interest rate is 11.702128% pa.
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