Suppose on can invest in a money market instrument that matures in 70 days that offers 8% nominal annual interest rate, what is the effective annual interest return on this security? Effective Annual Return

Q: Calculate the inflation-free interest rate assuming that the inflation rate is 6% and the nominal…

A: Nominal Rate Rate = (1+Real Rate ) *(1+Inflation Rate) -  1 Real Rate = (1+Nominal…

Q: What per annum nominal interest rate with interest compounded quarterly would be needed to achieve…

A: Compounding refers to the power of doubling the investment by adding interest .Compounding helps in…

Q: Suppose that an investment promises to pay a nominal 9.6 percent annual rate of interest. What is…

A: According to the rule, we will answer the first three subparts, for the remaining subparts, kindly…

Q: hat is her effective yield to maturity

A: To calculate the return of a Treasury bill, we need to compare its par value to its face value.…

Q: 1. The following are exercises in future (terminal) values: a. At the end of three years, how much…

A:

Q: An investor has a principal amount of $P. If he desires a payout (return) of 0.1P each year, how…

A: PMT is calculated as: Note: Let principal amount be $1,000

Q: If the current rate of interest is 6% APR, what is the future value of an investment that pays…

A: Interest rate = 6% Payment every two years = AED 15,000 Future value period = 20 Years

Q: You are offered an investment with a quoted annual interest rate of 10% with weekly compounding of…

A: The effective annual interest rate is the actual interest rate that we get if we take the frequency…

Q: Suppose that $18,000 is invested in a bond fund and the account grows to $23,344.74 in 5 yr. a. Use…

A: Continuously compounded interest rate is the interest which is calculated on the principal amount as…

Q: Franco is considering investing P18,500 in an investment that will have a maturity value of P32,500…

A: Investment amount (P) = P18,500 Maturity value (F) = P32,500 Period = 8 Years Monthly period (n) =…

Q: 1. The following are exercises in future (terminal) values: a. At the end of three years, how much…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Calculate the inflation-free interest rate assuming that the inflation rate is 6% and the nominal…

A: Solution :  As per the question Nominal Rate Rate = (1+Real Rate ) *(1+Inflation Rate) - 1 Real Rate…

Q: An investment will pay 13400 in five years what is the present value of this investment today if the…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: Give your answer to this question correct to the nearest rand. Phindile invests R12 795,00 now and…

A: Under stock market, investor is figuring out the best investment in order to gain maximum returns.…

Q: You investe an amount of P50,000 with a promised interest of 9% compounded quarterly. How many years…

A: Since the quoted interest rate is compounded quarterly, the effective interest rate will be used to…

Q: A proposed project which requires an investment of R10,000 (now) is expected to generate a series of…

A: Initial investment = R 10000 First payment (A) = R 6000 Growth rate (g) = 5% Interest rate (i) = 11%…

Q: An investment offers $6,100 per year for 15 years, with the first payment occurring today. If the…

A: present value of annuity due formula: PVADUE=A×1-11+rnr×1+r where, A=annuity r=rate n=number of…

Q: An investment offers $8800 per year for 14 years with the first payment occuring one year from now.…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: Which of the following investment options will maximize the rate of return in a period of 20 years?…

A: Monthly Compounding Number of compounding periods = 12   Interest Rate = Rate / Number of…

Q: You plan to reinvest the coupon interest at 12% rate of return per annum. Calculate the value of the…

A: Maturity or Redemption value is amount paid by issuer of bond at redemption of bond to bondholder.…

Q: A security that is selling for $1,500 and promises to pay annual interest of $130 forever would have…

A: Given details are : Current price of Security = $1500 Annual Interest = $130 Security provides…

Q: What is the present value of a security that will pay $5000 in 20 years if the securities of equal…

A: The present value of the cash flow is the current worth of a cash flow at a certain rate of interest…

Q: An annuity pays $1000 per year for 12 years. Inflation is 6 percent per year. The annuity costs…

A: Internal rate of return is one of the modern techniques of capital budgeting which considers the…

Q: You are managing an investment portfolio and sell an “inflation-protected” annuity that pays $3,862…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: payments with 10 years to maturity. What is the dollar amount of the annual coupon payment?

A: Information Provided: Face value = $1000 Coupon rate = 9% Maturity = 10 years

Q: You are managing an investment portfolio and sell an “inflation protected” annuity that pays $3,448…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: An investment will pay ¥13,400 in five years.  What is the present value of this investment today…

A: Present value is calculated by discounting the future cash flow at the discount rate.   Present…

Q: Answer the following questions:a. Assuming a rate of 10% annually, find the FV of $1,000 after 5…

A: Since you have posted a question with multiple sub- parts, we will solve first three subparts for…

Q: A security that is selling for $3,000 and promises to pay annual interest or $250 forever would have…

A: Calculation of annual yield:Answer:The annual yield of security is 8.333%.

Q: Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest…

A: When a certain amount is deposited at a certain interest with compounding, the accumulated amount is…

Q: At what annual interest rate would the following have to be invested? i) $500 to grow to $1,948.00…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: A fixed interest investment is growing at 2.9% per year. Its current value is $3500. a.) What will…

A: The concept of the time value of money states that the same amount of money has more value today…

Q: A 330-day T-Bill is currently selling at a discount rate of 3.97%. What will be the price of the…

A: The below expression can be used to calculate the current price of T-bill:

Q: ou have purchased a three-year inflation-indexed investment. This investment will pay you $X every…

A: Here, Inflation Rate is 0.5% every six month Annual rate of Return compounding semi annually is 6%…

Q: Your target is to earn an annualized rate of 5%, what is the most you can pay for a 135-day Treasury…

A: Provided a certain rate of return, present value (PV) is the current value of a potential amount of…

Q: Calculate, to the nearest cent, the future value FV of an investment of $10,000 at the stated…

A: given, pv = $10,000 r= 0.2%  n = 8 years = 8 x 12 = 96 months

Q: Suppose that you have opened a saving account with an initial deposit of $10,000. The account offers…

A: Initial deposit (P) = $10000 Final amount needed (F) = $15000 n = 10 years Let the annual interest =…

Q: How much is the present value of your investment if you invest P2,000 semi-annually at the start of…

A: The present value is the value of the sum received at time 0 or the current period. Given…

Q: A music composer deposits $5,000 into an investment that earns an annual interest rate of 5.8%. If…

A: Nominal interest rate = 5.8% Inflation rate = 1.7%

Q: Suppose that an investment promises to pay a real 9% annual rate of interest and inflation rate is…

A: The effective annual rate of interest is the real return on the savings account when the effects of…

Q: If $43,000 is invested now, which of the following value is closest to the equivalent future dollars…

A: Time value It tells money received today has more worth than that of receiving the same value later…

Q: What is the effective annual interest rate on this investment assuming that interest is compounded…

A: Effective Annual Interest Rate = (1 + (Nominal Interest rate / Number of compounding…

Q: How much is the present value of your investment if you invest P2,000 semi-annually at start of…

A: The present value of annuity due is the present value of a series of cash payments that are expected…

Q: suppose that an investment promises to pay a real 9% annual rate of interest and inflation rate is…

A: Given, Real Rate of Interest 9% Inflation 3%