You know that the stated rate of return is not what you really earned. If the inflation rate last year was 4.5%, and your investment had a stated rate of 18%, what was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real return %

You know that the stated rate of return is not what you really earned. If the inflation rate last year was 4.5%, and your investment had a stated rate of 18%, what was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real return %

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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The debt ratio will increase by more in any given year when O A. the initial debt ratio is greater. O B. the real interest rate is lower. O C. the growth rate of GDP is higher. O D. all of the above. OE. none of the above
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.) Economic State Fast growth Slow growth Recession Probability 0.32 Return 38% 0.34 12 0.34 -31 Answer is complete but not entirely correct. Expected return 3.84%
Consider the following information: State of Economy Recession Normal Boom Probability of State of Economy .17 .48 .35 Rate of Return if State Occurs Expected return -.12 14 .33 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %
There are four factors affecting interest rates: Production opportunities; Time preferences for current consumption; Risk; and Inflation. Suppose you decide to spend your bonus from this year to buy a new Porsche sports car, instead of buying Treasury Bonds, because of the low expected return on T-Bonds. Which of the fundamental factors is affecting your decision in the scenario described? (A) Inflation (B) Risk (C) Time preference for current consumption (D) Production opportunities
Consider the following data. Period 1 2 3 4 Rate of Return (%) - 5.8 - 8.0 - 3.8 2.0 5 5.2 What is the mean growth rate over these five periods (to 2 decimals)? Enter negative value as negative figure. X %
Consider the following information: State of Economy Recession Normal Boom Probability of State of Economy .22 .47 .31 Expected return Rate of Return if State Occurs -.11 .13 .32 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %
If Po is the initial price of the security, P₁ is the price after you hold it for a year, and X represents a direct payment, an asset's rate of return is equal to: rate of return = (P₁ - Po) rate of return = (P₁ - Po) + X rate of return = (P₁-Po) / Po + XPo rate of return = (P₁ - Po)/Po + X
According to the quantity theory and the Fisher equation, if the money growth increases by 3 percent and the real interest rate equals 2 percent, then the nominal interest rate will increase: I need typing clear urjent no chatgpt use i will give 5 upvotes full explanation plss
a. What is the NPV of investing today? The NPV is $428,235.29. (Round to the nearest dollar.) b. What is the NPV of waiting and investing tomorrow? The NPV if the rate goes up is $0. (Round to the nearest dollar.) The NPV if the rate goes down is $ 563,404.25. (Round to the nearest dollar.) The PV is $444,242. (Round to the nearest dollar.) c. Verify that the hurdle rate rule of thumb gives the correct time to invest in this case. The hurdle rule is $249,887.64. (Round to the nearest dollar.) (Select from the drop-down menu.) The NPV <0, so wait
4. Present value Finding a present value is the reverse of finding a future value. is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future. Which of the following investments that pay will $10,500 in 13 years will have a lower price today? O The security that earns an interest rate of 21.75%. O The security that earns an interest rate of 14.50%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 13.80%. Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options will exhibit the lower price? O An investment that matures in three years An investment that matures in four years Which of the following is true about present value calculations? O Other things remaining equal, the present value of a future cash flow increases if the investment time period…
Question 5
= 10. Recall that the risk-neutral probability of an asset corresponds to the probability for which the expected return on the asset equals the risk-free rate. Consider a special case where the current asset value is So 100, and the annual risk-free rate is r = = 0%. The asset does not pay dividends. Additionally, consider a simple distribution in which the asset price goes up by $10 with probability p and drops by $10 with probability 1 - p. Based on this information, what is the risk-neutral probability? It (a) 0.55 (b) 0.50 (c) 0.45 (d) 1.00

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