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Feliz [49]
2 years ago
10

An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this inves

tment will be only 7.9 percent. What does Alex believe the inflation rate will be over the next year
Business
1 answer:
Ahat [919]2 years ago
8 0

Answer:

2.87%.

Explanation:

The total return, also refer to as Nominal return or Money return, is based on the nominal interest rate. For example, let's say that you deposited $100 into a bank account and the bank offers you an annual return of 11%. This 11% is the stated interest rate, it is known as nominal interest rate, and it is rate before taking into account the effect of inflation. When we deduct the effect of inflation from nominal rate, it gives us the real rate. Real rate reflects the Purchasing Power. The Fisher equation will be used to determine the expected inflation rate. The Fisher equation is as follows:

                                            (1 + i ) = (1 + r) * (1 + h)

where

i = Nominal (Money) rate

r = Real rate

h = Inflation rate

Simply adjust the equation to calculate the inflation rate;

⇒ h = [(1 + i) / (1 + r)] - 1

OR h = [(1 + .11) / (1 + .079)] - 1 = 2.87%.

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You are bullish on Telecom stock. The current market price is $48 per share, and you have $9,600 of your own to invest. You borr
Gekata [30.6K]

Answer: 7%

Explanation:

The following can be deduced.from the question:

Loan amount = $9,600

Equity = $9,600

Market price = $48 per share

Total investment = $19,200

Growth of Investment = 5%.

We then calculate value of the investment in a year. This.will be:

= 19,200 × 1.05

= $20,160

Interest on the loan would be:

= $9,600 * 0.03

= $288

Therefore, rate of return will be:

= (20,160 - 9,600 - 288)/9,600 - 1

= 0.07 = 7%

8 0
3 years ago
Is Donald Trump a great president or Joe Biden?
Len [333]
Both of the president are not good president to be honest
6 0
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Ralph's pretty good grocery has been making an effort to diversify their workforce. new hires are encouraged to learn the organi
Sunny_sXe [5.5K]
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3 years ago
All of the following are associated with reporting controllable costs except:a. At lower levels, management have fewer controlla
stira [4]

Answer:

a. At lower levels, management have fewer controllable costs

Explanation:

The opposite is true, lower-level management have more controllabe costs than higher level management because top management focuses on the general strategy of the firm, while lower management focuses on the specific production processes.

It is in these specific production processes that many controllable costs arise. A production line supervisor (part of lower-level management) can directly control some variable costs such as energy used, amount of input, or even work hours.

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adoni [48]

Answer:

The correct answer to the following question will be Option C.

Explanation:

  • Constant cost industries seem to be a sector wherein the proportion of units produced as well as manufacturing costs every unit maintains the very same irrespective including its amount of manufacturing or rise in population. Which doesn't use input data in the appropriate amount to influence the rates of that same components by a shift in industry revenue.
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The other choices are not linked to an industry of this kind. Therefore the clarification above is correct.

7 0
3 years ago
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