answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Feliz [49]
2 years ago
10

An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the total real return on this inves

tment will be only 7.9 percent. What does Alex believe the inflation rate will be over the next year
Business
1 answer:
Ahat [919]2 years ago
8 0

Answer:

2.87%.

Explanation:

The total return, also refer to as Nominal return or Money return, is based on the nominal interest rate. For example, let's say that you deposited $100 into a bank account and the bank offers you an annual return of 11%. This 11% is the stated interest rate, it is known as nominal interest rate, and it is rate before taking into account the effect of inflation. When we deduct the effect of inflation from nominal rate, it gives us the real rate. Real rate reflects the Purchasing Power. The Fisher equation will be used to determine the expected inflation rate. The Fisher equation is as follows:

                                            (1 + i ) = (1 + r) * (1 + h)

where

i = Nominal (Money) rate

r = Real rate

h = Inflation rate

Simply adjust the equation to calculate the inflation rate;

⇒ h = [(1 + i) / (1 + r)] - 1

OR h = [(1 + .11) / (1 + .079)] - 1 = 2.87%.

You might be interested in
f a company is to respond successfully to change, it must be able to _____ and _____, which is known as the _____ approach.
padilas [110]

Answer: create ideas; implement ideas; ambidextrous

Explanation:

If a company is to respond successfully to change, it must be able to create ideas and then implement the ideas that have been created which is known as the ambidextrous approach.

The constant thing in every sphere of life is change and every individual and firm should always be ready when the change comes.

3 0
2 years ago
You plan on supplementing your income. you would like to withdraw a semiannual salary of $6,951.20 from an account paying 1.75%
ValentinkaMS [17]
We are given with the data: A = <span>$6,951.20 per semi-annum that is $13902.4 per annum, i equal to 1.75% compounded semi-annually, and asked for P or the present worth to maintain the withdrawal for 15 years. 
the formula to be used is attached in the file (third one). substitute the i = 0.0175, n = 30, A = </span>$13902.4 and get P. 

5 0
2 years ago
In year 1, Rim Corporation purchases 1,000 shares of treasury stock for $10 per share. In year 2, Rim reissues 100 shares of the
Alecsey [184]

Answer:

The correct answers are:

C-debit paid-in capital treasury shares $200

D-Debit retained  earnings                     $300

Explanation:

The purchase of treasury stock  for $10 per share implies that the price paid per share is the par value of each share.

Upon issue of 100 shares at $12 the following entries are required:

Dr Cash (100*$12)                  $1,200

Cr Treasury stock(100*$10)                  $1,000

Cr Paid-in capital in excess of par        $200

However upon issue of 500 share at $9 per share which is $1 less than the par value, hence there is $500 discount on the issue.

The discount is recorded as follows:

Dr paid-in capital           $200

Dr Retained earnings    $300

The $200 posted to paid-in capital is the same premium  that posted in there earlier when 100 shares.

5 0
1 year ago
An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and she puts
marysya [2.9K]

Answer:

c. 12%; 15.7%

Explanation:

The computations are shown below:

For expected rate of return:

= (Weightage of risky asset × return of risky asset) + (Weightage of treasury bill × return of treasury bill)

= (0.70 × 0.15) + (0.30 × 0.05)

= 10.5% + 1.5%

= 12%

For standard deviation:

= Weightage of risky asset × (variance ^ half)

= 0.70 × (0.05 ^ 0.5)

= 15.7%

7 0
2 years ago
In the current year, Norris, an individual, has $52,000 of ordinary income, a net short-term Capital loss (NSTCL) of $9,800 and
Tanya [424]

Answer:

The answer is an offset against normal income of $3,000 and a NSTCL move forward of $3,900.

Explanation:

Solution

Given that:

The net short term capital loss=$9800

The net Long term capital gain=$2900

The net short term capital loss is =$6900

Thus

In this case, 3000 is allowed to be set off against ordinary income and the balance of (6900 - 3000) = 3900 can be moved forward or over.

Therefore Norris report implies that an offset against normal income of $3,000 and a NSTCL carry forward of $3,900.

3 0
2 years ago
Other questions:
  • A leader high in initiating structure is most likely to​ ________.
    11·1 answer
  • The manager at East Coast Manufacturing organizes costs to prepare the Costs of Quality report. The manger compiled the followin
    13·1 answer
  • At Milton farms, where a large part of the management comes from the same sociocultural background, many employees of diverse et
    5·1 answer
  • In 2015, an inventor dreamed up and constructed a certain new kind of widget. He kept his invention a secret. Two years later, a
    15·1 answer
  • Yelk Garage uses time and materials pricing. It is setting prices for next year using the following information: Labor rate, inc
    11·1 answer
  • Now, assume that Addison’s savings institution modifies the terms of her account and agrees to pay 5.8% in compound interest on
    10·1 answer
  • When the price of chai tea lattés is $5, maxine buys 20 per month. when the price is $4, she buys 30 per month. maxine's demand
    7·1 answer
  • Cement Works has a beginning cash balance for the quarter of $1,211. The company requires a minimum cash balance of $1,200 and u
    5·1 answer
  • Blossom Company's trial balance reflected the following account balances at December 31, 2020: Accounts receivable (net) $40000
    5·1 answer
  • Vibrant Company had $850,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $500,000 in ea
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!