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borishaifa [10]
2 years ago
8

The real risk-free rate is 4.00%, inflation is expected to be 6.00% this year, and the maturity risk premium is zero. Ignoring a

ny cross-product terms, i.e., if averaging is required, use the arithmetic average, what is the equilibrium rate of return on a 1-year Treasury bond
Business
1 answer:
Hoochie [10]2 years ago
3 0

The equilibrium rate of return on a 1-year Treasury bond is 10.24%.

Using this formula

T-bond yield = [(1 + Real Risk-free Rate) × (1 + Inflation Rate)] - 1

Let plug in the formula

T-bond yield= [(1 + 0.04) × (1 + 0.06)] - 1

T-bond yield=[(1.04)×(1.06)] -1

T-bond yield= 1.1024 - 1

T-bond yield= 0.1024×100

T-bond yield=10.24%

Inconclusion the equilibrium rate of return on a 1-year Treasury bond is 10.24%.

Learn more here:

brainly.com/question/13576234

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Demand pull inflation can be started by A. an increase in the price of oil B. a decrease in the quantity of money. C. an increas
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Answer:

Option "C" is correct.

Explanation:

An increase in government expenditure causes more money inflow on demand over supply.

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3 years ago
The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3. Which of the following prices for a particu
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Answer:

option (C) $5 in the U.S. and 3 euros in Italy

Explanation:

Data provided in the question:

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Now,

Real exchange rate = [ Price of good in US ] ÷ [ Price of Good in Italy ]

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Ratio of Price of a good in US to Price of a Good in Italy = \frac{5}{3}

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4 0
2 years ago
Jameson Company uses average cost and a perpetual system. On January 1, the company had 600 units of inventory at an average cos
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Answer:

the average cost per unit that should be used to determine the cost of the units sold on January 28 is $ 59.00

Explanation:

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<u>Calculation of  the new cost of Inventory with each purchase of Inventory :</u>

January 10:

Cost per Unit = Total Cost / Total Number of Units

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Answer

The answer and procedures of the exercise are attached in the following image.

Explanation  

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