9. Calculating Real Rates of Return. If Treasury bills are currently paying 4.5 percent and the inflation rate is 1.6 percent, what is the approximate real rate of interest? The exact real rate? (H

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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LO 4
9. Calculating Real Rates of Return. If Treasury bills are currently paying
4.5 percent and the inflation rate is 1.6 percent, what is the approximate real
rate of interest? The exact real rate?
(H
CHAPTER 6
3. $913.98
5. 5.70%
7. 6.07%
9. 2.85%; 2.81%
11. 4.63%
13. Previous asked = $1,469.375
17. $4,881.80
19. +2%: -8.07%; -21.12%
-2%: 8.94%; 30.77%
21. 6.49%; 6.56%; 6.67%
23. $1,038.25
25. 9.56%; 9.27%
31. 6.51%
33. 6.20%
9
?
T-bills 4.5
inflation =+1. Co
nominat=
ا ما
4,5
1.6
- risk free rake
approximate = nominal - infl
4.5
2,98=3.6
= 2.81 = exact?
(₁+R)
(1+r) x (1+h)
1,645 = (1+=> X ( 1 +.016)
1045
approximate
= (1+r)
1,0285 = 1 tr
-1
ماای.۱
10285 =
X
2.85% ?
THE ANSWERS DO NOT MAKE ANY SENSE....THE BOOK IS VIOLATING BASIC ALGEBRA RULES...IS THIS A TYPO IN THE ANSWER KEY?
APPROXIMATE REAL RETURN SHOULD BE 4.5 - 1.6 = 2.90
REALL SHOULD BE USING THE FORMULA = 2.85
I DO NOT UNDERSTAND
Transcribed Image Text:LO 4 9. Calculating Real Rates of Return. If Treasury bills are currently paying 4.5 percent and the inflation rate is 1.6 percent, what is the approximate real rate of interest? The exact real rate? (H CHAPTER 6 3. $913.98 5. 5.70% 7. 6.07% 9. 2.85%; 2.81% 11. 4.63% 13. Previous asked = $1,469.375 17. $4,881.80 19. +2%: -8.07%; -21.12% -2%: 8.94%; 30.77% 21. 6.49%; 6.56%; 6.67% 23. $1,038.25 25. 9.56%; 9.27% 31. 6.51% 33. 6.20% 9 ? T-bills 4.5 inflation =+1. Co nominat= ا ما 4,5 1.6 - risk free rake approximate = nominal - infl 4.5 2,98=3.6 = 2.81 = exact? (₁+R) (1+r) x (1+h) 1,645 = (1+=> X ( 1 +.016) 1045 approximate = (1+r) 1,0285 = 1 tr -1 ماای.۱ 10285 = X 2.85% ? THE ANSWERS DO NOT MAKE ANY SENSE....THE BOOK IS VIOLATING BASIC ALGEBRA RULES...IS THIS A TYPO IN THE ANSWER KEY? APPROXIMATE REAL RETURN SHOULD BE 4.5 - 1.6 = 2.90 REALL SHOULD BE USING THE FORMULA = 2.85 I DO NOT UNDERSTAND
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