What is elaborative encoding?
1 answer:
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Answer:
A). to track monthly changes in prices paid by urban consumers.
Explanation:
CPI(Consumer Price Index) is characterized as 'a statistical estimate of the price level of goods and services bought by consumers for consumption purposes by the households.' It primarily aims to estimate the change or swap in the prices of the weighted average price of the common basket(consumption goods, as well as, services that the consumers pay for). It is calculated using the formula;
where,
= current Consumer Price Index
= Current price basket
= Cost of price basket in the base year
It assists in deducing whether the average prices have received a fall or rise and determines inflation or deflation. Thus, <u>option A</u> is the correct answer.
The rate of return should an investor expect to earn if he or she purchases these bonds is 4.81%
<h3>What is rate of return?</h3>A return in finance is a profit on an investment. It includes any change in the investment's value and/or cash flows received by the investor, such as interest payments, coupons, cash dividends, stock dividends, or the payoff from a derivative or structured product.
Annual Rate of Return: Definition and Calculation
For example, if an investment is worth $70 at the end of the year and was purchased for $60 at the start of the year, the annual rate of return is 16.66%.
A good return on investment is generally thought to be around 7% per year. Based on the historical average return of the S&P 500 after correcting for inflation, this is the barometer that many investors utilize.
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