Answer: $1,021,382
Explanation:
The Consumer Price index (CPI) is an economic measure that enables us calculate inflation. It checks for a price changes in a group or basket of goods and then averages these price changes to find out how much they may have changed overtime.
A higher CPI means prices have increased.
CPI can then be used to calculate the potential values of goods in different years using another year as a base. This means that prices of goods in one year can be written in terms of prices in another year.
This can be done by Dividing the CPI in the current year by the CPI in the base year (year being expressed in terms of) and then multiplying the result by the price of the good in question.
In this case the good is the salary of $75,000.
The 2007 equivalent of a 1931 salary will therefore be,
= 75,000 * ( 207/15.2)
= $1,021,381.57
= $1,021,382
Answer:
Beta = 2
New required rate of return = 16.50%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
12.50% = 3% + Beta × 4.75%
12.50% - 3% = Beta × 4.75%
So, the beta would be 2
The (Market rate of return - Risk-free rate of return) is also known as the market risk premium
Now the required rate of return would be
= 3% + 2 × 6.75%
= 3% + 13.50%
= 16.50%
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Answer:
Option (C) is correct.
Explanation:
The money multiplier = 1 ÷ reserve ratio
= 1 ÷ 0.1
= 10
If a bank purchases $65 million of government securities from the Fed then this will reduce the money supply in the economy because the money from the bank is going.
The decrease in money supply:
= purchase amount × money multiplier
= 65 × 10
= 650 million