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Scilla [17]
3 years ago
15

An unusual development in the wake of the 2007-2009 financial crisis was that nominal interest rates on some financial instrumen

ts turned negative. In which of the following examples would the nominal interest rate be negative? In each case explain your choice clearly.
a. The real interest rate is 2 percent and the expected inflation rate is 1 percent.

b. The real interest rate is zero and the expected inflation rate is 2 percent.

c. The real interest rate is 1 percent and the expected inflation rate is minus 2 percent.

d. The real interest rate is minus 2 percent and the expected inflation rate is 3 percent
Business
1 answer:
bogdanovich [222]3 years ago
4 0

Answer:

c. The real interest rate is 1 percent and the expected inflation rate is minus 2 percent

Explanation:

Nominal interest rate = real interest rate + expected inflation rate.

For the third option, the nominal interest rate: 1% + (-2%) = -1%

For the first option, the nominal interest rate: 2% + 1% = 3%

For the second option, the nominal interest rate: 0 + 2% = 2%

For the fourth option, the nominal interest rate: -2% + 3% = 1%

I hope my answer helps you

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Mason Company has a choice of two investment alternatives. The present value of cash inflows and outflows for the first alternat
STatiana [176]

Answer:

The net present values of the two investments are $46000 and $55000 respectively .

However, the present value index for the first investment is 1.40 while the second investment has 1.2 as net present value index.

Judging from net present value,the the second investment is preferable,but since net present value is an absolute value,it does not  relate the net present value to the underlying outlay,the first investment is preferred based on present value of index 1.4

Explanation:

The net present value for both alternatives is shown below:

                                                         $                               $

Present value of cash inflows         160000                335000

Present value of cash inflows         (114000)               (280000)

Net present value                             46000                  55000

Present value index=present value of inflows/present value of outflows

First investment       =160000/114000=1.40

Second investment =335000/280000=1.2

7 0
3 years ago
Senath Company's annual report reveals net credit sales of $266,000 and average accounts receivable of $46,000. The report also
SpyIntel [72]

Answer:

b. the average number of days to collect receivables is 64.

Explanation:

Average number of days to collect receivables = Accounts Receivable ÷ ( Sales / 365)

                                                                               = $46,000 ÷ ($266,000 / 365)

                                                                                = 63.10 or 64

Conclusion

The average number of days to collect receivables is 64

5 0
2 years ago
Provide an explanation of how his/her life will change economically, socially, and politically in a centrally planned economy.
galben [10]

Answer:spazz

Explanation:

spazz

4 0
2 years ago
Last year, Kurt invested $1,000 in ABC stock, $1,000 in long-term government bonds, and $1,000 in U.S. Treasury bills. Over the
marin [14]

Answer:

6%

Explanation:

3 0
3 years ago
The hedge ratio of a call option is
natima [27]

Answer:

A positive constant

Explanation:

the hedge ratio cimparez the amount of a position that is hedged to the entire position

7 0
2 years ago
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