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kvasek [131]
2 years ago
7

Suppose the rate of return on a 10-year T-bond is currently 5.00% and that on a 10-year Treasury Inflation Protected Security (T

IPS) is 2.10%. Suppose further that the maturity risk premium on a 10-year T-bond is 1.0%, that no maturity risk premium is required on TIPS, and that no liquidity premiums are required on any T-bonds. Given this data, what is the expected rate of inflation over the next 10 years
Business
2 answers:
olganol [36]2 years ago
3 0

Answer:

1.90%

Explanation:

For TIPS provide rate of real rate,

Inflation rate=return on T bond-return on TIPS-maturity risk premium and it is equal to

= 5%-2.10%-1%=1.90%.

Therefore the expected rate of inflation over the next 10 years is 1.90%

irina1246 [14]2 years ago
3 0

Answer:

The inflation rate over the next 10 years = 1.90%.

Explanation:

Nominal interest rate = real risk-free rate + inflation premium + default risk premium + liquidity premium +maturity risk premium.

Making Inflation premium the subject of the formula, we have:

Inflation premium = Nominal interest rate - real risk-free rate -inflation premium -  default risk premium - liquidity premium - maturity risk premium.

Inflation premium = 5% - 2.10% - 0 -0 -1.0% = 1.90%.

Therefore, the inflation rate over the next 10 years = 1.90%.

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2 years ago
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Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earn
ArbitrLikvidat [17]

Answer:

$1,135.05

Explanation:

Given:

Sales = $15,900

Net new equity = $500

Dividend payments = $75

Retained earnings = $418

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Tax rate = 21% = 0.21

Now,

Net income = Retained earnings + Dividend payments

= $418 + $75

= $493

Profit before tax = Net income ÷ ( 1 - tax rate )

= $493 ÷ ( 1 - 0.21 )

= $624.05

Therefore,

Earnings before interest and taxes

= Profit before tax + Interest expense

= $624.05 + $511

= $1,135.05

4 0
2 years ago
How did the Gupta rulers improve the economy of India?
just olya [345]
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2 years ago
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Which type of culture would most likely include characteristics such as openness, freedom, debate, and risk-taking?
adell [148]

Answer:

e. diversity-focused

Explanation:

-Ethical  culture refers to a culture in which people behave according to the group of values and standards set by the organization.

-Friendly  is a culture where there is a good working environment in which people are nice and kind.

-Innovative  is a culture in which leaders motivate people to think differently and propose new things.

-Customer-responsive  is a culture in which people focus on taking care of customer's needs.

-Diversity-focused is a culture in which the company is open to people with different backgrounds where there is freedom to offer new perspectives that allows to generate debate and people is more willing to take risks.

According to this, the answer is that the type of culture that would most likely include characteristics such as openness, freedom, debate, and risk-taking is diversity-focused.

8 0
2 years ago
A consumer has ​$140 in monthly income to be spent on two goods Z and B. The price of good Z ​(Pz​) is ​$6.00. The Marginal Rate
romanna [79]

Answer:

3 and 46.67 units

Explanation:

The formula and the computations are shown below:

The price of good B is

= {The price of good Z (Pz)} ÷ {Marginal rate of transformation}

= {$6} ÷ {2}

= 3

Now the number of units to be purchased for all income used is

= (Monthly income spent on two goods) ÷ (price of good B)

= ($140) ÷ (3)

= 46.67 units

By applying the above formula we can find out the price of good B and the number of units purchased

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2 years ago
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