Suppose the 1-year nominal interest rate in Zooropa is 9%, and Zooropa's expected inflation rate is 4%. What is the real interest rate in Zooropa?
What will be an ideal response?
The expected real interest rate is approximately 9% - 4% = 5%. The correct computation is: (1 + 0.09) / (1 + 0.04) – 1 = 0.0481 or 4.81%.
You might also like to view...
In customer service, pet peeves or hot buttons are behaviors such as ________.
A. demonstrating knowledge or authority B. exhibiting a professional appearance C. putting someone's call on hold without permission D. answering the telephone promptly
The reason that a blind copy of the purchase order is sent to receiving is to
a. inform receiving when a shipment is due b. force a count of the items delivered c. inform receiving of the type, quantity, and price of items to be delivered d. require that the goods delivered are inspected
Describe the significance of the accounting equation.
What will be an ideal response?
Transportation companies like J.B. Hunt continuously look for ways to increase fuel efficiency. This environmentally friendly business approach is most in line with a(n) ________ strategy.
A. Environmental cost leadership B. Green marketing C. Eco-efficiency D. Eco-branding E. Sustainable value innovation