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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:

$11,650

Explanation:

The adjusted cash balance per bank at August 31 2022 is calculated as;

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Given that;

Cash balance per bank = $10,690

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__________ are electronic markets in which banks and institutional traders buy and sell various currencies on behalf of business
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<h3>Why foreign exchange is important?</h3>

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3 0
1 year ago
Bramble Corp. incurs the following costs to produce 13000 units of a subcomponent: Direct materials $10920 Direct labor 14690 Va
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Answer:

$4,850

Explanation:

The computation is shown below:

Total cost when the production is 13,000 units

Direct materials $10,920

Direct labor $14,690

Variable overhead $16,380

Total $41,900

And, the other case

Their new cost on supplier offer is

= $2.85 × 13,000 units

= $37,050

In the case when the order is accepted So the net income would increased by

= $41,900 - $37,050

= $4,850

7 0
3 years ago
Suppose that the world price of oil is $70 per barrel and that the United States can buy all the oil it wants at this price. Sup
inysia [295]

Answer:

The supply and demand curves for the United States are shown in the graphs attached.

Explanation:

Free trade in oil implies that a country in the international oil market can import as much oil as it wants and export as much oil as it wants.

The costs of demand and the revenues obtained in each case are given below:

QD1 cost = 68 × 70 = $4,760

QS1 revenue = 16 × 70 = $1,120

QD2 cost = 470 × 70 = $32,900

QS2 revenue = 15 × 70 = $1,050

QD3 cost = 672 × 70 = $47,040

QS3 revenue = 14 × 70 = $980

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QS4 revenue = 13 × 70 = $910

QD5 cost = 1076 × 70 = $75,320

QS5 revenue = 12 × 70 = $840

Find the graph attachments.

7 0
3 years ago
Why does the cost of capital constitute a direct link between return on capital expenditure and the returns required by capital
Vinil7 [7]

Answer:

The overview of the statement is summarized below.

Explanation:

  • The capital structure seems to be the ratio of net required by investors toward about there capital expenditure. Investment return capital spending seems to be the return rate required for expenditure.
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3 0
2 years ago
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