1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Snowcat [4.5K]
3 years ago
12

Consider a newly issued TIPS bond with a 3-year maturity, par value of $1,000, and coupon rate of 4.00%. Assume annual coupon pa

yments.
Time Inflation in
Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment
0 $ 1,000.00
1 2.0% $ 1,020.00 $ 40.80 0 $ 40.80
2 1.0 % $ 1,030.20 $ 41.21 0 $ 41.21
3 3.0 % $ 1,061.11 $ 42.44 $ 1,061.11 $ 1,103.55
What is the nominal rate of return on the TIPS bond in the first year?
a. 3.00%
b. 4.08%
c. 6.08%
d. 6.00%
Business
1 answer:
Ray Of Light [21]3 years ago
8 0

Answer: c. 6.08%

Explanation:

The return for the first year is given as;

= Coupon payment / Par Value

= 40.80/ 1,000

= 4.08%

TIPS are inflation protected securities so this return is the real return. Nominal return is;

= Real return + inflation

= 4.08% + 2.0%

= 6.08%

You might be interested in
Assume the appropriate discount rate for the following cash flows is 4.78 percent per
lana66690 [7]

Answer:

$9,589.75  

Explanation:

The computation of the present value of the cash flows should be shown in the excel spreadsheet. Kindly find the two attachment out of which one attachment contains the final values, the other attachment contains the formula sheet

After applying the formulas,

The present value of the cash flows is $9,589.75

Hence, the same is to be considered

8 0
3 years ago
Suppose that the government passes legisaltion that imposes a legal barrier to entry on the tree nursery industry and the number
Aleks04 [339]

Answer:

decline in production differentiation and ,less competition

Explanation:

One would expect a gradual decline in product differentiation. This is because the few firms left in operation do not have to seek innovative ideas to capture the market, since they are few and the chances that a new rival will emerge are minute owing to the legal barrier. There is the development of an oligopolistic competition on product quality since the number of producers left is low and there Is the barrier of new entrants, both of which are key characteristics of an oligopolistic competition.

6 0
3 years ago
When the government runs a budget deficit, we would expect to see that:.
zaharov [31]

Answer:

We will expect to see the government spending more of the money than it is bring to the table/bringing in the money, and in this situation the national savings will be decreasing, and when they do lower, the investments/primary stores will also be decreasing. And if this happen the lowering investments leads to lower long-term economic growth.

Explanation

8 0
3 years ago
Read 2 more answers
A shopkeeper explains to you that she keeps down the cost of running her business because her husband works in the shop for free
True [87]

Answer:

explicit cost is kept down, but not the implicit

Explanation:

As we know that there is two cost i.e. explicit cost and the other one is implict cost. The explicit cost is the cost that are spent like out of pocket expenses i.e. salaries & wages, etc. On the other hand the implicit cost is the cost that are spent on diversifying the business

Now as per the given situation, the above is the answer and also the explicit costs are classified into fixed and variable costs while doing the business

3 0
3 years ago
You want to have $1,000,000, 25 years from today. Assuming a 7% annual return (which will be compounded monthly), how much do yo
scoundrel [369]

Answer:

Monthly payments = $1,234.54

Explanation:

given data

Future value = $1,000,000

time = 25 year = 25 × 12 = 300 months

rate = 7 % annual = \frac{0.07}{12} = 0.5833%  monthly

to find out

Monthly payments

solution

we will apply here future value formula that is express as

Future value = Monthly payments × \frac{(1+rate)^{time} - 1}{rate}  ..........1

put here value we get

Future value = Monthly payments × \frac{(1+rate)^{time} - 1}{rate}

1,000,000 = Monthly payments × \frac{(1+0.005833)^{300} - 1}{0.005833}

solve it we get

Monthly payments = $1,234.54

8 0
3 years ago
Other questions:
  • Merchandise inventory at the end of the year was understated. which of the following statements correctly states the effect of t
    6·1 answer
  • Newland and Palermo form a partnership. Newland contributes land with a book value of $50,000 and a fair value of $60,000. Newla
    7·1 answer
  • Before your first day of work, it is a good idea to _____.
    9·1 answer
  • What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets? multiple cho
    10·1 answer
  • Northern Pacific Fixtures Corporation sells a single product for $28 per unit. If variable expenses are 65% of sales and fixed e
    5·1 answer
  • using the information below compute the cycle efficiencyDays' sales in accounts receivable 15daysDays' sales in inventory 72days
    8·2 answers
  • If you purchase a product from an online retailer, the safest method of payment is
    14·1 answer
  • The following static budget is provided: Units 22,000 Units Sales $ 220,000 Less variable costs: Manufacturing costs $ 77,000 Se
    12·1 answer
  • Which employee in the Business, Management, and Administration career cluster would most likely work in a cubicle?
    13·2 answers
  • The revenue manager at the 133-room Big Bluff Bunkhouse Hotel noticed that, based on information from the past several years, th
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!