which of the following statements are true? 1. there is an inverse relationship between interest rates and future vales 2. the effective annual interest rate (EAR) will be higher than the annual percentage rate (APR) for a loan that compounds interest annually 3. there is an inverse relationship between present value and interest rates 4. all else equal, the more frequent interest in compounded on a loan, the more interest you will have to pay

Q: Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one…

A: Given: Present value = $650 Periodic interest rate = 3.6% per period (annum)  n= number of periods =…

Q: al rate of interest on a bank account is 2.5% and the general rate of inflation is 4%. b) Using the…

A: Given information :

Q: (b) Once upon a time, a bank was advertising an interest rate for savings account of i% per year. A…

A: Information Provided: Interest rate = 6%   NOTE: As per our policy, we only answer one question…

Q: T/F and why?

A: Real interest rate is the rate of interest that received by the investor after adjusting the…

Q: If there is a deflation rate of 2% and your account is earning a nominal interest rate of 1.75%,…

A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%

Q: Find the interest rate (or rates of return) in each of the following situations. Do not round…

A: The rate of return is a measure used to evaluate the profitability or performance of an investment.…

Q: Quantitative Problem: Bank 1 lends funds at a nominal rate of 9% with payments to be made…

A: Information Provided: Bank 1 Rate = 9% compounded semi-annually Bank 2 Rate Compounding = Quarterly…

Q: npound interest, interest is earned both on the original principal, an ne interest added to the…

A: Present value and future value depends upon interest rate and period.

Q: 4. Calculating Interest Rates. Solve for the unknown interest rate in each of the following: 3…

A: ACCORDING TO TIME VAUE OF MONEY, FUTURE VALUE=PRESENT VALUE×1+ratetime

Q: Suppose the interest rate is 4.3%. a. Having $450 today is equivalent to having what amount in one…

A: The money's present value is its current worth compared to some of its potential future value after…

Q: last year, i took out a loan with an interest rate of 4.24% when inflation was only 1.9%. now…

A: The real interest rate is the inflation adjusted interest rate which is reflecting the increase in…

Q: The nominal interest rate on a loan is 12.5% and inflation is 3%. What is the real interest rate?

A: Information Provided: Nominal Rate = 12.5% Inflation = 3%

Q: Which of the following statements is CORRECT, assuming positive interest rates and holding other…

A: The time value of money defines that the money that you have today is valued more than in the…

Q: You are planning on taking out a mortgage and would ake to determine the cash value for a given down…

A: Solution:- When a loan is taken, it can either be repaid as lump sum payment or in instalments.

Q: b) An APR of 5.875 produces an effective annual interest rate of 6.04% what is the compounding…

A: The effective annual rate is the actual return that the company owes to its investors.

Q: If the effective interest rate is 15%, what nominal rate of interest is charged for a c compounded…

A: Compounding continuously is imaginary situation which actually does not exist in real life…

Q: uestion 1: Solve the following TVM problems using Excel formulas. You MUST use Excel formulas (FV or…

A: a. Future value$ 81,102.53b. Future value$ 85,289.85c. Future value$ 444,644.11Explanation:The above…

Q: 10. Antonio asks for a one-year loan at a bank when the one-year Treasury rate is 2%. a. If the loan…

A: When companies are unable to finance the requirement of business they take the help of loans. loans…

Q: Which of the following is false? I. A lower interest rate would increase the present value of an…

A: Solution: Present value means the value of cash flows in today’s terms.

Q: Explain in general terms how the portion s of loan payment going to principal and interest change…

A: A loan payment consists of principle and interest, change over the life of the loan because with…

Q: Over the duration of the loan, the total loan payment is... ... gradually increasing for…

A: Loans are paid by equal fixed payments that carry the interest and loan payments.

Q: What is the total amount you will pay if you do not pay the loan within the term and meet all the…

A: Step 1:Given: Loan amount = $5400Period of loan = 72 monthsFinal loan amount = $6965.35Interest is…

Q: Given this is the situation, how should I be calculating the APR for each form of debt? It is…

A: Debt is something that one party borrows from another, usually money. Debt is used to make large…

Q: f the following is a loan, identify a) the principal amount, b) the monthly interest rate, and c)…

A: Loans are paid by the equal monthly installments that carry the payment for interest and payment for…

Q: Suppose you want to determine the forward rates for your client, a lender who is considering a…

A: The forward rate refers to the forecasted rate of return that the FRA is expected to provide based…

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: charged by banks (this is the The interest rate on loans is often linked to the banks lowest lending…

A: Interest rate is the rate or charge of borrowing money.

Q: What are the Effects of Maturity on Monthly Payments on Fully Amortizing Loans?

A: In fully amortized loan, total loan will be paid off by end of maturity i.e. loan term. Monthly…

Q: Consider the sale for which the lender quoted a mortgage capitalization rate at 9.0%. If the equity…

A: Given: Mortgage capitalization rate at 9.0% equity capitalization rate is 15.0% Loan-to-value ratio…

Q: Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment…

A: A. OPTION (a): IS WRONGAS TIME PASSES, THE OUTSTANDING BALANCE OF LOAN DECREASES, SO INTEREST…

Q: effective interest rate

A: Formula: effective interest rate= [1+ interest rate/period)^ period]-1 *100

Q: F=19803 5% 10% 15% $2X $3X $3X Select one: O a. 3500 O b. 2000 O c. 10000 O d. 3000 O e. 5000

A: Future Value = Sum of Amount * ( 1 + rate )years

Q: For part d, told to manipulate the equation:  ΔM(t)= rM(t)Δt M(t) represents the money value at time…

A: Let W be the withdrawl rate from the savings account to the checking account. Rest of the symbols…

Q: Calculating Real Rates of Return IfTreasury bills are currently paying 4.7 percent and the inflation…

A: Real rate of return refers to the return after the adjustment of the inflation rate.

Q: Savings institutions often state a nominal rate, which can be thought of as a simple annual interest…

A: Nominal yield = 7% (Compounding daily)Number of days in a year = 365 days

Q: What is the maximum interest rate the borrower will pay during the 30-year term for this loan? If…

A: Data given:  Start rate = 3.50% Life time Interest cap rate = 6%  Margin on the loan= 3.00%

Q: 4. Non annual compounding period The number of compounding periods in one year is called compounding…

A: Nominal rate = 11.00%The periodic rate is The effective annual rate is