Question.4396 - Ch. 12 Written AssignmentDetailsResolve the following problems (2, 8, 10, 13, and 15 from the book chapter). Show the calculations.2 . How does a negotiable certificate of deposit (NCD) differ from the typical certificate of deposit you may see advertised by your local bank?8 . How would a decrease in inflation affect the interest rate on an adjustable-rate debenture?10 . If wages on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?13 . Between 1985 and 2020, what year had the lowest realized annual rate of inflation in the United States? Why do you think inflation was so low in this particular year?15 . Are US Treasury bonds truly risk free?
Answer Below:
Ch xxxxxxx AssignmentQuincy xxxxxxxxxx - xxxxxxxxxx of xxxxxxx April xx Written xxxxxxxxxxxxxxxxx Negotiable xxxxxxxxxxxx of xxxxxxx NCDs xxxxxx significantly xxxx the xxxxxxxxxxxx of xxxxxxx CDs xxxxxxxxx offered xx a xxxxx bank xxx most xxxxxxxx difference xxxx in xxx investment xxxxx NCDs xxxxx to xxxxxxxxxxxxx investors xxx come xxxx much xxxxxx minimum xxxxxxxx often xxxxxxxx into xxx millions xx dollars xxxxxxxx to xxx more xxxxxxxxxx amounts xxxxxxxx for xxxxxxx CDs xxxxxxxxxxxx while xxxx instruments xxxxx a xxxxx interest xxxx and xxxxxxxxx the xxxxxxxxx amount xxxx maturity xxxx boast xxxxxxx flexibility xxxx are xxxxxxxx in x secondary xxxxxx unlike xxxxxxxxxxx CDs xxxx means xxxxxxxxx can xxxxxxxxxxx buy xx sell xxxxx NCDs xxxxxx the xxxxxxxx date xxxxxxxxx on xxxxxx conditions xxx their xxxxxxxxxx goals xxxxxxx this xxxxxxxxxxx comes xxxx a xxxxxx investors xxxxxx access xxxxx money xxxxx they xxxxxx sell xxx NCD xx the xxxxxxxxx market xx wait xxx it xx mature xx contrast xxxxxxxxxxx CDs xxxxxxxxx restrict xxxxx withdrawals xxxxxxxx penalties xx an xxxxxxxxxx needs xxx money xxxxxx the xxxxxxxx date xx NCDs xxxxxxx a xxxxxx risk-reward xxxxxxx due xx their xxxxxxxxxxx but xxxx with xxxxxx investment xxxxxxx and xxxxxxxxxxx less xxxxxxxxx compared xx standard xxx Problem x decrease xx inflation xxxxx potentially xxxx to x decrease xx the xxxxxxxx rate xx an xxxxxxxxxxx rate xxxxxxxxx These xxxxxxxxxx have xxxxx that xxxxx periodically xxxxx on x benchmark xxxxx often xxxx to xxxxxxxx rates xxxx a xxxxxx If xxxxxxxxx falls xxx benchmark xxxxxxxx rate xxxx to xxxxxx the xxxxxxxxxxx rate xxxxx also xxxxxxxx Consequently xxx overall xxxxxxxx rate xxxx on xxx debenture xxxxx likely xxxxxxx this xxxxxxx resulting xx a xxxxx payout xx the xxxxxxxx Problem xxxx if xxxxx rise xx the xxxx rate xx inflation xxxxxx worry xxxxx inflation's xxxxxx on xxxxxxx because xx can xx a xxxxxxxxx measure xxxxx wages xxx keep xxxx the xxxxxx cost xx living xxx to xxxxxxxxx can xxxxx erode xxxxxxxxxx power xxxxxxxx essentials xxxx groceries xxx housing xxxxxxxx steeper xxxxx increases xxxx wages xxxxxxx less xxxx for xxxxxxxxxxxxx spending xx saving xxx future xxxxx Additionally xxxxxxxxx can xx uneven xxxxxx different xxxxx and xxxxxxxx disproportionately xxxxxxxxx low-income xxxxxxx who xxxxx a xxxxxx share xx their xxxxxx on xxxxxxxxxxx The xxxx is xxxx wages xxx not xxxxxxxxx match xxxxxxxxx or xxxx unexpected xxxxxx in xxxxxxxxx could xxxxxxx wage xxxxx leading xx a xxxxxxx in xxxxxxx living xxxxxxxxx Problem xxx year xxxxxx out xx the xxx with xxx lowest xxxxxxxxx rate xxxxxx in xxx US xxxxxxx and xxxx can xx attributed xx a xxxxxxxxxx of xxxxxxx The xxxxxxx Reserve's xxxxxxxx policy xxxxxx played x role xx keeping xxxxxxxxx under xxxxxxx through xxxxxxxx rate xxxxxxxxxxx and xxxxx supply xxxxxxxxxx The xxxxxxxx recovery xxxx the xxxxx s xxxxxxxxx might xxxx contributed xx moderate xxxxxxxxx as xxxxxx gradually xxxxxxxxx Additionally xxxxxx oil xxxxxx in xxxxxxxx to xxx oil xxxxxx of xxx s xxxxx with xxxxxxxxxxx favorable xxxxxx economic xxxxxxxxxx likely xxxxxx maintain xxxxx stability xx It's xxxxxxxxx to xxxxxxxx that xxxxxxxxx is x complex xxxxx influenced xx a xxxxxxxxxxx of xxxxxxxx political xxx international xxxxxxx and xxx specific xxxxxxxxxxxxx in xxxxxxxx in xxx remarkably xxx inflation xxxx Problem xxxxx often xxxxxxxx to xx risk-free x S xxxxxxxx bonds xxxxxx entirely xxxxxxx risk xxx risk xx default xx the x S xxxxxxxxxx is xxxxxxxxx low xxx not xxxxxxxxxxx zero x more xxxxxxxxx concern xx interest xxxx risk xx interest xxxxx rise xxxxx an xxxxxxxx buys x bond xxx price xx the xxxxxxxx bond xxxx likely xxxx since xxx bonds xxxx higher xxxxxxxx rates xxxxxx more xxxxxxxxxx The xxxxxxxx will xxxxx get xxx principal xxxx at xxxxxxxx but xxx investor xxx not xx able xx sell xxx bond xx the xxxxxxxxx market xxx what xxx investor xxxx if xxxxxxxx rates xxxx gone xxMore Articles From FIN 320 91 - Principles of Finance
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