This topic contains a solution. Click here to go to the answer

Author Question: If a financial institution extends a 25 year loan at a 6 percent interest rate, and then the ... (Read 123 times)

fahad

  • Hero Member
  • *****
  • Posts: 570
If a financial institution extends a 25 year loan at a 6 percent interest rate, and then the inflation rate increases suddenly and unexpectedly to 6 percent per year, the institution receives on its loan a real return of
 
  A) minus 12 percent.
  B) zero percent.
  C) 6 percent.
  D) 12 percent.
  E) 36 percent.

Question 2

A savings and loan strives for a 6 real return on its loans and estimates a 7 annual rate of inflation. It should therefore charge its borrowers a nominal interest rate of
 
  A) 13.
  B) 7.
  C) 6.
  D) 1.17.
  E) 1.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Kjones0604

  • Sr. Member
  • ****
  • Posts: 327
Answer to Question 1

B

Answer to Question 2

A




fahad

  • Member
  • Posts: 570
Reply 2 on: Jun 29, 2018
:D TYSM


atrochim

  • Member
  • Posts: 331
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

Common abbreviations that cause medication errors include U (unit), mg (milligram), QD (every day), SC (subcutaneous), TIW (three times per week), D/C (discharge or discontinue), HS (at bedtime or "hours of sleep"), cc (cubic centimeters), and AU (each ear).

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

People with high total cholesterol have about two times the risk for heart disease as people with ideal levels.

For a complete list of videos, visit our video library