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hjlf
3 years ago
7

The CPI is 120 in year 1 and 150 in year 2. All inflation is anticipated. If Gringotts Bank charges an interest rate of 20.00 pe

rcent in year​ 2, the​ bank's real interest rate is nothing​%. ​(Round your response to two decimal places and include a minus sign if necessary.​)
Business
1 answer:
liq [111]3 years ago
3 0

Answer:

Gringotts Bank real interest rate = 20% - 25% = -5%

Explanation:

real interest rate = nominal interest rate - inflation rate

the inflation rate between year 1 and year 2 = [(CPI year 2 - CPI year 1) / CPI year 1] x 100 = [(150 - 120) / 120] x 100 = (30 / 120) x 100 = 0.25 x 100 = 25%

Gringotts Bank real interest rate = 20% - 25% = -5%

since the interest rate is negative, that means that Gringott Bank is actually losing money by lending it at 20% since the inflation rate is much higher.  

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5 0
3 years ago
A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt: Is callable
Eddi Din [679]

Answer:

A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt: Is callable by the creditor - Will be refinanced with stock.

Option A is the correct answer.

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Thus, in this instance, a current liability can be detailed as a long term debt in the balance sheet.

6 0
2 years ago
a. Balance sheet accounts are arranged into ______ general categories. b. Common Stock and Dividends are examples of ______ acco
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e. Account.

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8 0
3 years ago
Anna Prentice has worked for years fixing broken typewriters. She is laid off from her job as fewer and fewer people use typewri
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Answer:

1. structural unemployment 

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I hope my answer helps you

4 0
3 years ago
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3 years ago
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