Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A $4000 initial deposit in a bank account grows continuously according to the formula B(t)=4000e^0.05t ,where B is the amount in the bank t years after 2012. Would you rather have the investment initially describe or the $4000 but invested at an interest rate of 6% compounded monthly? Why?
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- Number of years needed to accumulate a future amount For the following case, determine the number of years it will take for the initial deposit to grow to equal the future amount at the given interest rate. (Click-on the icon here in order to copy the contents of the data table below into a spreadsheet.) The number of years for this investment, n, is Initial deposit Future amount $12,187 $24,600 years. (Round to two decimal places.) Interest rate 8%arrow_forwardOptimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.45% at a time when infialion is around 0 9% For the average saver, the real rate of interest on his or her savings is % (Round your response to two decimal places and use a minus sign if necessay.) Il banks expect that the rate of inflation in the coming year will be 3.9% and they want a real return of 8% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is %. (Round your response to two decimal places) 11 the economy experiences an unexpectedly high rate of inflation, the group that would tend to benefit is O A. creditors (people or institutions that are owed money). O B. deblors (pcople or businesses who owe moncy). OC. both would benefit cgqually O D. neilher bencfits.arrow_forwardAt time 0 you had $2500 in the bank and 21 years later you had $15650. Calculate the effective annual rate of return if the bank pays interest continuouslyarrow_forward
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