What is the expected real interest rate

Assignment Help Financial Management
Reference no: EM13809159

The two-year interest rate is 6.5% and the expected annual inflation rate is 3%. What is the expected real interest rate?

Reference no: EM13809159

Questions Cloud

A widget manufacturer currently produces : A widget manufacturer currently produces 300,000 units a year. It buys widget lids from an outside supplier at a price of $4 a lid. The plant manager believes that it would be cheaper to make these lids rather than buy them. Direct production costs a..
Earnings and dividends per share-what is current stock price : ACME Inc’s earnings and dividends per share are expected to grow indefinitely by 5% a year. If next year's dividend is $10 and the market capitalization rate is 8%, what is the current stock price? ACME Inc’s growth will stop after year 3. In year 4 ..
What is the market capitalization rate : Company B does not slow back any earnings and is expected to produce a level dividend stream of $8 a share. If the current stock price is $65, what is the market capitalization rate?
What is the expected real interest rate : The two-year interest rate is 6.5% and the expected annual inflation rate is 3%. What is the expected real interest rate?
Treasury bond-what is the present value of the bond : A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 6.5% every six months. The semi annually compounded interest rate is 5.0%. What is the present value of the bond?
About the interest rate : What interest rate would make it worthwhile to incur a compensating balance of $20,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $275,000?
Trade credit terms-annualized cost of forgoing the discount : If a firm buys trade credit terms of 4/10, net 60 and decides to forgo the trade credit discount and pay the next day, what is the annualized cost of forgoing the discount assuming a 360 day year?
Abdicating our national sovereignty to foreign regulators : Discuss the move by the SEC towards using international accounting standards (IAS). Do you believe that the use of IASs will make it easier for investors in a global economy, or do you think the SEC is abdicating our national sovereignty to foreign r..

Reviews

Write a Review

Financial Management Questions & Answers

  Banking regulations tend to encourage financial innovation

Why do banking regulations tend to encourage financial innovation? How have money market funds, junk bonds, commercial paper, and securitization tended to reduce the profitability of traditional bank lending?

  Calculate the value of kendras operations

Calculate the historical growth rate in earnings and calculate the next expected dividend per share, D1 - calculate the value of Kendra's operations.

  How many shares were bought back

Jam llc unexpectedly executed a share buy-back. Before the buy-back the number of outstanding shares was 11,123,000, the market price of one share was $2.04 and the return on levered equity was 12.00%. The return on levered equity after the buy-back ..

  Inclusive have the following common conditions the riskless

inclusive have the following common conditions the riskless interest rate r gt 0 the underlier is trading at a spot

  What was its interest expense

Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $8 million, and its tax rate was 35%. What was its interest expense?

  Incorporating foreign equity and foreign debt in a portfolio

You are a young portfolio manager who has just been assigned a new portfolio. The current strategic asset allocation of the portfolio is 80% equity and 20% fixed income securities. The entire portfolio is invested in U.S securities only. What are the..

  Calculate the degree of operating leverage

Deci-Bell, Inc. is producing new headphones. Deci-Bell Inc. has a base level of sales of 312,464 units. Sales price per unit is $148.61 and variable cost per unit is $61.52. Total annual operating fixed costs are $6,294,441.

  What would be the beta of the replacement security

An investor has a 10 security portfolio with a beta of 1.5, each with a market value of $5,000. If the investor wants to reduce the overall beta to 1.4 by eliminating a risk security with a beta of 1.7, what would be the beta of the replacement secur..

  Compute the current price of the bonds

Bond value. The Lone Star Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is:

  Fixed-rate mortgage

You have decided to buy a house. You can get a mortgage rate of 5 percent, and you want your payments to be $1,540 or less. How much can you borrow on a 15-year fixed-rate mortgage?

  Combines scenario analysis with sensitivity analysis

Which one of these combines scenario analysis with sensitivity analysis?

  Assume the market price of a 5-year bond for margaret inc

assume the market price of a 5-year bond for margaret inc. is 900 and it has a par value of 1000. the bond has an

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd