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sergeinik [125]
3 years ago
14

Find the EAR in each of the following cases. (Do not round intermediate calculations and enter your answers as a percent rounded

to 2 decimal places, e.g., 32.16. Use 365 days in a year.)
Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)
8.3% Quarterly%
17.3 Monthly
13.3 Daily
10.3 Infinite
Business
1 answer:
Tatiana [17]3 years ago
5 0

Answer:

1. 8.56%

2. 18.74%

3. 14.22%

4. 10.85%

Explanation:

Effective annual rate = (1 + periodic interest rate) ^m - 1

M = number of compounding per year

1. (1 + 0.083 / 4 ) ^ 4 - 1 = 0.085619 = 8.56%

2. ( 1 + 0.173 / 12)^ 12 - 1 = 0.187399 = 18.74%

3. (1 + 0.133 / 365)^ 365 - 1 = 0.1422 = 14.22%

4. For continuous compounding = e^r - 1

e = 2.7182818

e^0.103 - 1 = 0.108491 = 10.85%

I hope my answer helps you

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7 0
3 years ago
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You own a portfolio that is 23 percent invested in Stock X, 38 percent in Stock Y, and 39 percent in Stock Z. The expected retur
Finger [1]

Answer:

The expected return on the portfolio is <u>14.09%</u>.

Explanation:

Expected return on a portfolio refers to addition of the mu;ti[licatiom of weight in the portfolio and expected return of all the investment in the same portfolio.

Therefore, the expected return on this portfolio can be calculated using the following formula:

PER = (rX * wX) + (rY * wY) + (rZ * wZ) ....................... (1)

Where,

PER = Portfolio expected return = ?

rX = Expected returns on stock X = 11%

wX = Weight of amount invested in stock X = 23%

rY = Expected returns on stock Y = 14%

wY = Weight of amount invested in stock Y = 38%

rZ = Expected returns on stock Z = 16%

wZ = Weight of amount invested in stock Z = 39%

Substituting the values into equation (1), we have:

PER = (11% * 23%) + (14% * 38%) + (16% * 39%) = 14.09%

Therefore, the expected return on the portfolio is <u>14.09%</u>.

7 0
3 years ago
Which of the following situations would be considered cyclical unemployment? Choose one or more: A. A typewriter repair shop clo
ladessa [460]

Answer:

Which of the following situations would be considered cyclical unemployment?

B-D

Explanation:

D. A worker on the assembly line at Ford is laid off due to a drop in car sales brought on by a weak economy.

B. A recent college graduate cannot find a job anywhere, despite excellent qualifications. The news media report that there are not enough jobs to go around in the economy.

8 0
3 years ago
1. When the Fed sells bonds in open-market operations, it _____________ the money supply.
makkiz [27]

Answer:

1) decreases

2) decreases

3) increase

4)  decrease

5) decreases

Explanation:

1. When the Fed sells bonds in open-market operations, it decreases the money supply.

If the Fed sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds.

2. If the Fed raises the reserve requirement, the money supply decreases.

By increasing the reserve requirement, the Federal Reserve is essentially taking money out of the money supply and increasing the cost of credit.

3. When the Fed decreases the interest rate it pays on reserves, the money supply will increase.

When the Fed decreases the interest rate paid on reserves, it: decreases the reserve-deposit ratio (rr) thereby increasing the money supply.

4) When the FOMC increases its target for the federal funds rate, the money supply will decrease.

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System. While the FOMC can't mandate a particular federal funds rate, they can adjust the money supply so that interest rates will move toward the target rate. Therefore, by increasing the amount of money in the system it can cause interest rates to fall; by decreasing the money supply it can make interest rates rise.

5) When Citibank repays a loan it had previously taken from the Fed, it decreases the money supply.

The money supply reduces gradually by the amount of the principal when bank loans are repaid. So if Citibank repays a loan it had previously taken from the Fed, it will decrease the money supply.

7 0
3 years ago
What is the standard deviation of a stock that has a 10% chance of earning 18%, a 10% chance of making 11%, a 40% chance of maki
Yakvenalex [24]

Answer:

A. 7.95%.

Explanation:

Calculate the expected rate of return for the investment as follows:

\begin{aligned}\text { Expected rate of return } &=(\text { Probability } \times \text { Rate of return })+(\text { Probability } \times \text { Rate of return })+\\&(\text { Probability } \times \text { Rate of retum }) \\=&(0.40 \times 15 \%)+(0.50 \times 10 \%)+(0.10 \times-3 \%) \\=& 0.06+0.05-0.003 \\=& 0.107

Calculate the standard deviation of the investment as follows:

\begin{aligned}\text { Standard deviation }=&\left\{\begin{array}{l} \text { Probability } \left.\times(\text { Return }-\text { Expected return })^{2}\right)+ \\\text { (Probability } \left.\times(\text { Return }-\text { Expected return })^{2}\right)+ \\\text { (Probability } \left.\times(\text { Return }-\text { Expected return })^{2}\right)\end{array}\right.

=\sqrt{\left(0.40 \times(0.15-0.107)^{2}\right)+\left(0.50 \times(0.10-0.107)^{2}\right)+} \\=\sqrt{0.0007396+0.0000245+0.0018769} \\=\sqrt{0.002641} \\=0.05139066063011

7 0
3 years ago
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