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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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Answer:

Saving

Explanation:

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6 0
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BSW Corporation has a bond issue outstanding with an annual coupon rate of 7 percent paid quarterly and four years remaining unt
Furkat [3]

Answer:

$788.35

Explanation:

In this question, we use the present value formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

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The formula is shown below:

= PV(Rate;NPER;PMT;FV;type)

So, after solving this, the answer would be $788.35

4 0
3 years ago
Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2018. Du
Kruka [31]

Answer:

$660,000

Explanation:

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= (Common stock balance) + (Earnings × purchased shares ÷ Total outstanding shares) - (dividend × purchased shares ÷ Total outstanding shares)

= ($600,000) + ($400,000 × 200 shares ÷ 1,000 shares) - ($1,00,000 × 200 shares ÷ 1,000 shares)

= $600,000 + $8,0000 - $20,000

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5 0
4 years ago
You go to the grocery store every 4 days. your friend goes to the grocery store every 10 days. if you and your friend both go to
GaryK [48]

The answer for this question would be you will both go to the store on the same day in 20 days. The reason behind this is you go every 4 days so at the time you go on your fifth round of those 4 days it would be your friend's 2nd time shopping in your friend's 10 shopping days.

7 0
4 years ago
The store managers of Chimbake, a chain of bakeries, are allowed to come up with new dessert flavors of their choice as long as
bekas [8.4K]

Answer:

B) Decentralization of authority

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6 0
4 years ago
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