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grandymaker [24]
3 years ago
5

Suppose the inflation premium is 2 percent and the nominal interest rate is 1 percent. Instructions: In part a, enter your answe

r as a whole number. In part b, round your answer to 1 decimal place. If you are entering any negative numbers be sure to include a negative sign () in front of those numbers a. What is the real interest rate? b. What if the inflation premium is 3 percent while the nominal interest rate is 0.5 percent?
Business
1 answer:
Fudgin [204]3 years ago
8 0

Answer:

(a) Real Interest Rate   = -1 %

(b) Real Interest Rate   = -2.4 %

Explanation:

Real Interest Rate = (1+ Nominal Interest rate)/(1+Inflation Rate) -1

 (a)Real Interest Rate = (1+0.01)/(1+0.02)-1

                                    = -1 %

 (b) Real Interest Rate = (1+0.005)/(1+0.03) -1

                                      = -2.4 %

Real Interest Rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor.

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Using the value-to-book version of the residual income valuation approach, the value-to-book ratio is determined as________.
Alja [10]

Using the value-to-book version of the residual income valuation approach, the value-to-book ratio is determined as <u>one plus the present value of future residual ROCE.</u>

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Residual income is the earnings an individual has left in spite of everything private debts and prices are paid in personal finance. Residual earnings are the extent used to assist determine the creditworthiness of an ability borrower.

Basically, it's for the amount of cash that is left over after making the important bills. Residual income is a crucial metric because it is one of the figures that banks and lenders observe earlier than approving loans.

In monetary surroundings, residual earnings are the money that someone has left over after their charges are included every month. Passive earnings, but, nevertheless has the identical definition in a financial environment that it does in online commercial enterprise surroundings.

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3 0
2 years ago
Shawna offers to type Philip's research paper at the price of $6 per page. Philip's paper will be 20 pages long and will cost hi
RideAnS [48]

Answer:

Revocation

Explanation:

Based on the information given She is able to do this because she has the right of REVOCATION which means the right to cancel , terminate, withdraw or bring a contract to an end due to some reason just as the case of Shawna and Philip's in which we were told that Shawna had a second thought on wheither Philip's will have the ability to pay her for the services she is about to rendered to him by deciding to calls Philip in order to withdraw her offer before Philip accepts it.

Therefore Shawna is able to withdraw her offer because she has the right of REVOCATION

8 0
3 years ago
a. Tara buys only shoes and socks. When the price of shoes goes up, Tara continues buying exactly the same number of socks as be
babymother [125]

Answer: False

Explanation:

Shoes and socks are complementary goods. A complementary good is a good that the demand for the good increases when there is reduction in price of its complement. Complementary goods have a negative cross elasticity of demand i.e. the demand for the good rises when the price of the other good decreases. Assuming "A" is a complement to "B" , a rise in the price of "A" will have a negative effect on the demand for "B".

A reduction in the price of A leads to a positive outcome on the demand for B resulting in an outward shift of its demand curve. The quantity demanded of one good has a direct relationship on the quantity demanded of the other good as they are linked together. When the price of shoes increases, less of socks will be demanded and vice versa.

5 0
3 years ago
payment history and total debt, together, comprise of 65% of your score. why do you think it’s so high?
Otrada [13]

<u>Solution and Explanation:</u>

Most money related specialists characterize a terrible FICO rating as anything beneath a 600, however, every loan specialist has its own principles while checking on applications. The normal American has a FICO assessment of 687, which helps put the range into viewpoint.  

In the event that you have poor credit, you've presumably had a blend of negative things on your credit report, as missed installments, misconducts, or possibly a chapter 11 or dispossession. You can generally demand a free credit report to make sense of what precisely is keeping your score so low. Truth be told, we prescribe checking your credit report each year.  

Government law permits you access to a free duplicate of every one of your three reports like clockwork, so there's no explanation not to exploit this advantage.

6 0
4 years ago
Brown Fashions Inc.'s December 31, 2018 balance sheet showed total common equity of $4,050,000 and 290,000 shares of stock outst
gtnhenbr [62]

Answer:I think it would be 1,4568

Explanation:

Hopefully I am right

7 0
3 years ago
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