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gizmo_the_mogwai [7]
3 years ago
7

Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 6.00% per year. What is

the real risk-free rate of return, r*? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic average.
Business
1 answer:
olganol [36]3 years ago
4 0

Answer:

Real rate of return = 0.94%

Explanation:

The relationship between the nominal rates of return, real rate of return and inflation is:

( 1+ nominal rate ) = ( 1+ real rate) *( 1 + inflation)

or, (1.07) = (1 + real rate) * (1.06)

Hence, the real rate of return is = (1.07)/(1.06) = (1 + real rate of return)

1.0094 = 1 + real rate of return

Real rate of return = 0.94%

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nexus9112 [7]

Answer:

I used the most recent figures of the international property rights index (year 2019), and the most recent GDP per capita estimamtes by the IMF in purchasing power parity. (year 2019)

Three countries with high scores, with GDP per capita (PPP):

  1. Finland - score of 8.712 - U$ 46.430
  2. Switzerland - score of 8.571 - U$ 64.649
  3. United States - score of 8.202 - U$ 62.606

Three countries with low scores, with GDP per capita (PPP):

  1. Ukraine - score of 4.432 - U$ 9.283
  2. Pakistan - score of 3.874 - U$ 5.680
  3. Haiti - score of 2.703 - U$ 1.864

The pattern that we find is that there is a strong correlation between the International Property Right Index scores and the GDP per capita figures. This is consistent with the findings in other similar rankings such as the Global Competitiveness Report, published by the World Economic Forum, and the Economic Freedom Index, published by the Heritage Foundation.

What can be interpreted is that property rights, and the strong enforcement of those property rights promote economic development and growth. This is because the protection of private property stimulates human action. For example, the United States has a strong judiciary, and rule of law. In this country, people can invest their money in a project with the certainty that those invesments will not be expropriated by an arbitrary judiciary. This promotes development because investing leads to higher economic output.

Those same incentives do not exist in countries that do not enforce property rights, and that is one of the main reasons why they are poor.  

4 0
3 years ago
Speakers usually use a(n) ______________ outline as a rough draft they revisit and revise continually throughout the preparation
Nikitich [7]
<span>Speakers usually use a(n) rough draft outline or a preparation outline as a rough draft they revisit and revise continually throughout the preparation of their speeches.

The name of these outlines accurately describe their duty. They are the first stage in the process of developing and writing a clear and concise speech. These outlines help keep their topic on track and their speech organized. </span>
4 0
4 years ago
Which action would a government most likely take to reduce its<br> unemployment rate?
ss7ja [257]
A because if you increase taxes people won’t want t to work
6 0
3 years ago
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You are earning $40,000 per year as a branch manager at Dunkin Donuts. You are planning on leaving your job and going back to co
sergij07 [2.7K]

Answer:

It increases the opportunity cost because you are foregoing more money for college.

Explanation:

Opportunity cost is the benefit profit, or value of something that is missed or given up when an individual chooses one alternative over another.  

The 10% rise in salary offered by the branch manager increases the opportunity cost of going to college. This is because the higher cost (money) you could have earned by not going to college is foregone.

3 0
3 years ago
Dana and Larry are married and live in Texas. Dana earns a salary of $45,000 and Larry has $25,000 of rental income from his sep
vodomira [7]

Answer:

D) $25,000

Explanation:

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If they were filing together, then they would declare $70,000 as combined income (= $25,000 + $45,000).

3 0
3 years ago
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