Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Given:
Real rate | Inflation rate |
4.50% | 7% |
8% | 12% |
3% | 2% |
1% | 3.50% |
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- You observe that the current interest rate on short-term U.S. Treasury bills is 4.86 percent. You also read in the newspaper that the GDP deflator, which is a common macroeconomic indicator used by market analysts to gauge the inflation rate, currently implies that inflation is 1.65 percent. What is the approximate real rate of interest on short-term Treasury bills? (Enter your answer as a percent rounded to 2 decimal places.)arrow_forwardThe real rate is 4 percent and the inflation rate is 5.6 percent. What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)arrow_forward(Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 7.2 percent? ______________________________________________________________________ The nominal rate of interest would be __________%. (Round to two decimal places.)arrow_forward
- If Treasury bills are currently paying 6.25 percent and the inflation rate is 1.8 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate real rate Exact real rate % %arrow_forwardIf the rate of inflation is 5.00%, what nominal interest rate is necessary for you to earn a 3.00% real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.) The nominal interest rate needed for your investment is %. (Round to two decimal places.)arrow_forward(Related to Checkpoint 9.6) (Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 4.3 percent and the expected inflation rate is 6.9 percent? The nominal rate of interest would be %. (Round to two decimal places.) Carrow_forward
- What is the real interest rate given a nominal rate of 8.7% and an inflation rate of 1.5%? A. 11.3% B. 8.5% C. 7.1% D. 9.9%arrow_forwardSolve for the unknown interest rate in each of the following (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.):arrow_forwardUsing the following information, determine the real rate of interest: Rate % inflation 0.69 T-bill 5.00 10y T-Bond 6.00 10y AAA Corporate 6.41 10y AA Corporate 8.24arrow_forward
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