Author Question: A more precise calculation of the Fisher Effect includes: A) nominal rate, the bond rate, and ... (Read 67 times)

CBme · **on:** Jul 10, 2018

A more precise calculation of the Fisher Effect includes:

A) nominal rate, the bond rate, and inflation.
B) nominal rate the real rate, expected inflation, and the product of the real rate and expected inflation.
C) nominal rate and inflation only.
D) nominal rate and the real rate only.

Question 2

Betty is contemplating purchasing shares in Daily Bugle Corp and holding them for 2 years, at which time she will sell them. The market price of these shares is expected to be 36.50 in two years (after the second dividend).

The next two annual dividends are expected to be: D1=1.00 and D2=1.20. The first dividend will be paid on one year and the second in two years. Betty requires a return of 11. What is the maximum price Betty is willing to pay for shares in this company?
A) 30.53
B) 30.60
C) 31.33
D) 31.50
E) 31.99