QUESTION 1 Assume that the Expectations Hypothesis for interest rates is true. If the real rate of interest is 2 and the expected inflation rate is 2, then the nominal interest rate will be approximately 4% True False QUESTION 2 Eaton Vance Company has sales of $200,000, Cost of Goods Sold of 100,000, a net income of $18,750, and the following balance sheet: Cash $ 10,000 Accounts payable $ 55,000 Receivables 50,000 Other current liabilities 20,000 Inventories 150,000 Long-term debt 75,000 Net fixed assets 90,000 Common equity 150.000 Total assets $300,000 Total liabilities and equity $300.000 Calculate the firm's Return on Equity. 10% 7.596 12.5% 5%