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Which of the following statements is most correct? Select one: a. If expected inflation increases, interest rates are likely to decrease. b. If companies have
Which of the following statements is most correct? Select one: a. If expected inflation increases, interest rates are likely to decrease. b. If companies have more productive opportunities, interest rates are likely to increase. c. If the risk of the project increases, interest rates are likely to decrease. d. If individuals increase their savings rate, interest rates are likely to increase. A 30-day T-bill is currently yielding 5.5%. The following information is available: inflation premium = 3.60%, liquidity premium = 0.6%, maturity risk premium = 1.8% and default risk premium = 2.15%. On the basis of these data, the nominal risk-free rate is and the real risk-free rate is Select one: a. 1.5%; 3.0% O b. 2.5%; 5.5% c.0.5%; 0.1% d. 5.5%; 1.9% e. 5.5%; 2.5%
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