Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 15, 2024

A lender requires 3.1% as the compensation for deferred consumption and 1.4% as the compensation for default risk. The inflation rate is expected to be

A lender requires 3.1% as the compensation for deferred consumption and 1.4% as the compensation for default risk. The inflation rate is expected to be 1.2% and the lender charges 0.9% to compensate for unexpected inflation. All the rates are annual rates compounded continuously. Calculate the annual interest rate compounded continuously the lender should charge on the loan. A lender requires 3.1% as the compensation for deferred consumption and 1.4% as the compensation for default risk. The inflation rate is expected to be 1.2% and the lender charges 0.9% to compensate for unexpected inflation. All the rates are annual rates compounded continuously. Calculate the annual interest rate compounded continuously the lender should charge on the loan

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

Equipment and data. Shawn, of Exercises 27, 29, and 31, could obtain long-range predictions of the growing conditions for next summer. He thinks that those might show a probability of good growing...

Answered: 1 week ago

Question

★★★★★

Four firms have roughly equal shares of the market for farm-raised catfish. The price elasticity of demand for the market as a whole is estimated at -1.5. a. If all firms raised their prices by 5...

Answered: 1 week ago

Question

★★★★★

Why is it important that employees have input on performance standards? Select one: a . so managers can persuade employees that the standards are reasonable b . to set standards that employees can...

Answered: 1 week ago

Question

★★★★★

Firms generally Have only one source of capital and one cape rate for all their assets Have multiple sources of capital, with multiple cap rates have a difficult time calculating the overall cap rate...

Answered: 1 week ago

Question

★★★★★

Q. A. If the deflection of the cantilever member shown in Figure E at x = 4.5 ft must be limited to 1.336", find the diameter of the member required. Assume na 1.25. E = 30 Mpsi. Q' 3 kip/st

Answered: 1 week ago

Question

★★★★★

Suppose a survey conducted in 2012 asked a group of adults from a certain country whether they drink seltzer water. Of the 3,065 people who responded, 23.1% said they drink seltzer water. Complete...

Answered: 1 week ago

Question

★★★★★

Your certified industrial hygienist (CIH) has found that a part of your workforce is being exposed to chromium (VI), and you have begun testing these employees at the end of the work shift on...

Answered: 1 week ago

Question

★★★★★

TASK #3 Determine the veritcal stress increase at point A. Line load 110 kN/m Line load 440 kN/m. 6 m -3 m A 4 m

Answered: 1 week ago

Question

★★★★★

2. Due to a weak connection, there is a break in the circuit (shown below) between points a and b. If R1 = 5.23 0, R2 = 2.29 0, and R3 = 16.2 0, and the two batteries &1 and &2 have voltages of 22.0...

Answered: 1 week ago

Previous Question Next Question