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Shkiper50 [21]
2 years ago
5

the outstanding bonds of Winter Tires Inc. provide a real rate of return of 3.6 percent. If the current rate of inflation is 2.6

8 percent, what is the actual nominal rate of return on these bonds?
Business
1 answer:
Pepsi [2]2 years ago
5 0

Answer:

Actual nominal rate = 6.38%

Explanation:

Actual nominal rate of return:

(1 + real rate) = (1 + nominal rate) / (1 + inflation rate)

1 + 3.6% = 1 + nominal rate / 1 + 2.68%

1 + 0.036 = 1 + nominal rate / 1 + 0.0268

1.036 = 1 + nominal rate / 1.0268

1 + nominal rate = 1.036 * 1.0268

1 + nominal rate = 1.0637648

nominal rate = 1.0637648 - 1

nominal rate = 0.0637648

nominal rate = 6.37648

nominal rate = 6.38%

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I think b may be the answer

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2 years ago
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SCI just paid a dividend (D₀) of $1.92 per share, and its annual dividend is expected to grow at a constant rate (g) of 4.00% pe
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Answer:

intrinsic value of SCI’s shares is $33.28 per share

Explanation:

given data

dividend (D₀) = $1.92 per share

constant rate (g) = 4.00% per year

required return (rs ) = 10.00%

to find out

intrinsic value of SCI’s shares

solution

we know that intrinsic value is here express as

intrinsic value = current dividend × ( 1+ growth rate ) ÷ ( required rate - growth rate )    .............................1

put here value we get

intrinsic value = \frac{1.92*(1+0.04)}{0.10-0.04}

intrinsic value = 33.28

so intrinsic value of SCI’s shares is $33.28 per share

3 0
2 years ago
Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp and p
Dmitry [639]

Answer:

Explanation:

1. Assuming an economy is experiencing a sharp and prolonged inflationary trend, I'll recommend the following changes:

a. Reserve ratio: I will increase the reserve ratio.

b. Discount rate: I will increase the discount rate.

c. Open market operations: I will recommend tightening the money supply through the selling of more government bonds.

2a. The reserve requirement is the central bank regulation which sets the minimum amount of reserves which must be held by a commercial bank. An increase in the reserve ratio will lead to less money in circulation.

b. the money supply: Thhe money supply will contract i.e tighten

c. Interest rates: Interest rates will rise leading to an increase in the investments which keeps money out of circulation and also lead to a decrease in inflation rates.

d. Aggregate demand. Aggregate demand would reduce, and this would lead to a reduction in inflation.

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2 years ago
XYZ Corp is doing a study of consumers' use of soap across the US. The questiuonnaire for the sttudy will include questions abou
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Answer:

Such a study is best characterized as a non-experimental study.

Explanation:

Non-experimental research is the study whereby a researcher cannot manipulate, control, or change the subjects of a research but instead, the researcher depends on observation, interpretation, or interactions to arrive at a conclusion. This means that in a non-experimental study, the researcher relies on surveys, correlations or case studies.

Non-experimental research has a great level of external validity because it is usually generalized to a bigger population. XYZ Corp making use of a survey is an example of non-experimental study.

8 0
2 years ago
The following information is available for Wildhorse Co. for the month of January: expected cash receipts $59,320; expected cash
Margarita [4]

Answer:

Ending cash balance$8,230

Explanation:

Preparation of basic cash budget for the month of January.

Wildhorse Co CASH BUDGET for the month of January

Beginning cash balance$11,890

Add: Cash receipts $59,320

Total cash available $71,210

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Less: Cash disbursements ($66,850)

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Ending cash balance$8,230

Therefore the basic cash budget for the month of January will be $8,230

6 0
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