None Your investments increased in value by 11.6 percent last year, but your purchasing power increasedby only 6.5 percent. What was the approximate inflation rate?

Solution:Inflation rate refers to the difference between the nominal rate and the real rate.So,…

Answered: Your investments increased in value by…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 2IEE

See similar textbooks

Similar questions

Your investments increased in value by 14.2 percent last year but your purchasing power increased by only 5.4 percent. What was the approximate inflation rate?
An investment had a nominal return of 11.2 percent last year. If the real return on investment was only 7.5 percent, what was the inflation rate for the year?
Your investments increased in value by 16.3 percent last year, but your purchasing power increased by only 7.5 percent What was the approximate inflation rate? (Enter your answer as a percent rounded to 1 decimal place.)
Say you own an asset that had a total return last year of 10.4 percent. If the inflation rate last year was 4.3 percent, what was your real return?
If the velocity of circulation is constant, real GDP is growing at 3 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 7 percent a year, calculate the inflation rate, the growth rate of money, and the growth rate of nominal GDP.
In 1975, interest rates were 7.83% and the rate of inflation was 12.42% in the United States. What was the real interest rate in 1975? How would the purchasing power of your savings have changed over the year?
2. If the bank paid me 9.98% interest per year and if my actual return (the increase in my purchasing power) was only 5.25%, what was the inflation rate during the year? (Show Work)
An investment had a nominal return of 10.6percent last year. If the real return on investment was only 6.3 percent, what was the inflation rate for the year? a. 17.57% b. 3.89% c. 10.73% d. 4.49%
If an investment grew by 9% while it had a change in purchasing power of 7%, what was the inflation rate over the period? (Convert your answer to a percent but enter numbers only in your response.)
After a 1 year investment you receive 7.4% interest (nominal) from your bank. However, looking at how prices have changed, you soon realize that the real rate of interest was actually 3.4%. How much was inflation during that year? Enter your answer as a percentage, rounded to 2 decimals, and without the percentage sign ('%'). For example, if your answer is 0.02345, then enter 2.35
An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this investment will be only 7.4 percent. What does Alex believe the inflation rate will be over the next year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Inflation rate %
If inflation during the last 12 months was 2% and the interest rate during that periodwas 5%, what was the real rate of interest? If inflation is expected to average 4%during the next year and the real rate is 3%, what should the current interest ratebe? (3%; 7%)

SEE MORE QUESTIONS

Recommended textbooks for you

International Financial Management

Finance

ISBN:

9780357130698

Author:

Madura

Publisher:

Cengage

International Financial Management

Finance

ISBN:

9780357130698

Author:

Madura

Publisher:

Cengage

SEE MORE TEXTBOOKS

Your investments increased in value by 11.6 percent last year, but your purchasing power increased by only 6.5 percent. What was the approximate inflation rate?