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matrenka [14]
3 years ago
13

Refer to the table below and calculate both the real and nominal rates of return on the TIPS bond in the second and third years.

(Do not round intermediate calculations. Round your answers to 2 decimal places.)
Principal and Interest Payments for a Treasury Inflation Protected
Security
Time Inflation in Year Just Ended Par Value Coupon Payment + Principal Repayment = Total Payment
0 $1,000.00
1 3% $1,030.00 $51.50 0 $51.50
2 3% $1,060.90 $53.05 0 $53.05
3 1% $1,071.51 $53.58 $1,071.51 $1,125.08
Business
1 answer:
SpyIntel [72]3 years ago
4 0

Answer:

Second year :

Nominal rate = 8.15%

Real rate = 5%

Third year :

Nominal rate = 6.00%

Real rate = 4.95%

Explanation:

Nominal return =(Interest + price change) / initial price

Real rate of return = (1 + nominal rate) / (1 + inflation) - 1

Second year:

Nominal return = [53.05 + (1060.90 - 1030)]÷ 1030

(53.05 + 30.90) ÷ 1030 = 0.0815 = 8.15%

Real rate

[(1 + 0.0815) ÷ (1 + 0.03)] - 1

(1.0815 ÷ 1.03) - 1 = 0.05 = 5%

THIRD YEAR:

Nominal return = [53.58 + (1071.51 - 1060.90)]÷ 1060.90

(53.05 + 10.61) ÷ 1060.90 = 0.060 = 6.00%

Real rate

[(1 + 0.060) ÷ (1 + 0.01)] - 1

(1.060 ÷ 1.01) - 1 = 0.0495 = 4.95%

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Answer:

$27,000

Explanation:

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5 0
3 years ago
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7 0
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ASC 480-10 provides guidance on determining whether (1) certain financial instruments with both debt-like and equity-like charac
Aliun [14]

Answer:

. Redeemable shares.

• Redeemable noncontrolling interests.

• Forward contracts to repurchase own shares.

• Forward contracts to sell redeemable shares.

• Written put options on own stock.

• Warrants (and written call options) on redeemable equity shares.

• Warrants on shares with deemed liquidation provisions.

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• Equity collars.

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Explanation:

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6 0
3 years ago
what are the documents required by department of trade and industry when registering for a private company
meriva

Social security for employee profiling, insurances, and other employee and company benefits

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3 years ago
Global Company makes a product that is expected to use 2.2 pounds of material per unit of product. The material has a standard c
avanturin [10]

Answer:

Favorable for price and unfavorable for usage.

Explanation:

Provided Information,

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Since actual quantity used = 2.3 pounds is more than standard 2.2 pounds the variance will be unfavorable

Therefore, Price Variance = Favorable, and Quantity Variance = Unfavorable.

7 0
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