Author Question: Nico Nelson, a management trainee at a large New York-based bank, is trying to estimate the real ... (Read 55 times)

Anajune7 · **on:** Jul 11, 2018

Nico Nelson, a management trainee at a large New York-based bank, is trying to estimate the real rate of return expected by investors.

He notes that the 3-month T-bill currently yields 3 percent and has decided to use the consumer price index as a proxy for expected inflation. What is the estimated real rate of interest if the CPI is currently 2 percent?
A) 5
B) 1
C) 3
D) 2

Question 2

The basic inputs to an effective financial analysis are a firm's income statement and the balance sheet.

Indicate whether the statement is true or false