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Ierofanga [76]
3 years ago
14

The 1970s saw a period of high inflation in many industrialized countries including the united states. due to the increase in th

e rate of​ inflation, lenders, including credit card​ companies, revised their nominal interest rates upward. how is the rate of inflation related to the nominal interest rate that credit card companies​ charge, and why would lenders need to increase the nominal interest rate when the inflation rate​ increases?
a. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to stabilize credit market activity.
b. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to maintain their desired real return.
c. the nominal rate of interest and the inflation rate are inversely​ related; lenders need to raise the nominal rate when inflation increases to satisfy government regulations on lending practices.
d. the nominal rate of interest is the real rate of interest less the rate of​ inflation; lenders need to raise the nomin
Business
1 answer:
Anna [14]3 years ago
8 0

Answer : b. the nominal rate of interest is the real rate of interest plus the rate of​ inflation; lenders need to raise the nominal rate when inflation increases to maintain their desired real return.

Explanation: Nominal rate = real rate + inflation . Suppose they had an real return of 4% when the inflation was 1% and they charged at credit card rate at 5%. Now if the inflation increases to 2%, the cannot continue to charge 5% since in that case their real return would only be 3%. Hence they will now have to charge 6% to still get their original real rate of 4%

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Answer:

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Explanation:

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If a consumer chooses not to perceive they are reaching ________.
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Sheridan, Inc., has net income of $15,300,000 on net sales of $450,000,000.The company has total assets of $125,000,000 and stoc
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Answer:

(a) 0.1224

(b) 0.3825

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Net income = $15,300,000

Net sales = $450,000,000

Total assets = $125,000,000

Stockholders’ equity = $40,000,000

(A) Return on assets:

= Net income ÷ Total assets

= $15,300,000 ÷ $125,000,000

= 0.1224

(b) Return on equity:

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3 years ago
The following is an excerpt from Walmart's 2015 Form 10-K A summary of the provision for income taxes is as follows ($ millions)
REY [17]

Answer:

a. The mount of income tax expense does Walmart report in its income statement for 2015 was $8,074

b. The amount of Walmart's income tax expense that was determined from the company's tax returns is $8,615

c. Deferred taxes decreased Walmart's income tax provision for the year

Explanation:

a. In order to calculate what amount of income tax expenses does Walmart report in its income statement for 2015, we would have to use the following formula:

Income tax expenses= Current year income taxes + Deferred tax expense

Income tax expenses=$8,615-$541

Income tax expenses=$8,074

b. The amount of Walmart's income tax expense that was determined from the company's tax returns is $8,615. This are the Total current tax provision.

c. Deferred taxes decreased Walmart's income tax provision for the year becuase the Deferred taxes are benefit.

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3 years ago
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