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It's about MACROECONOMICS The real interest rate is equal to the nominal interest rate A. divided by the inflation rate.?? B. minus the inflation rate.

It's about MACROECONOMICS

  1. The real interest rate is equal to the nominal interest rate

A.

divided by the inflation rate.??

B.

minus the inflation rate.

C.

divided by the price level.??

D.

multiplied by the price level.??

2. The formula assumes that payment upon default is zero. In?fact, it is often positive.

How would you change the formula in this?case?

A.

The final term would become p?"times" 1.

B.

The final term would become p?"times" some fraction of i+x.

C.

The final term would become p?"times" some fraction of (1+i+x).

D.

The final term would become some fraction of (1+i+x).

3.

image text in transcribed
Calculating the risk premium on bonds The text presents a formula where (1 +0 = (1 -p)(1+i+X)+p(0) where i is the nominal interest rate on a nsldess bond x is the risk premium p is the probability of default (bankmptcy) ii lf the probability of bankruptcy E zero, the rate of interest on the risky bond is When the nominal interest rate for a risky borrower is 15% and the nominal policy rate of interest is 4%, the probability of bankruptcy is %, (Round your response to two decimaf pieces.)

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