Question
1. An APR reflects __________ interest only; but an EAR includes _________ interest. 2. If your credit card carries a rate of 1.7% per month,
1. An APR reflects __________ interest only; but an EAR includes _________ interest.
2. If your credit card carries a rate of 1.7% per month, what is its APR? (Your answer should be a % carried to 1 place)
3. Your credit card carries an annual rate of 21.6% APR with a minimum payment due monthly. Disregarding any late fees, if you dont pay the monthly minimum amount for a year, what is its EAR? (Your answer should be a % carried to 2 places.)
4. You invest in a 7-year Bed Bath and Beyond note that pays interest of 8.5% per year. If inflation is 6.8% per year, what is: a. The exact, real interest rate (Your answer should be a % carried to 3 places), and b. The approximate real interest rate? (Your answer should be a % carried to 1 place)
5. Yield curve questions: a. The US Treasury yield curve provides clues about the future direction of: 1) _________________, 2) _________________ and 3) __________________. b. In a couple of words, why is the US Yield Curve usually upward sloping? c. In a few words, what is an inverted yield curve? d. An inverted yield curve is a prediction of:
Please answer ALL parts and ALL questions! Thank you
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