About the industrial production rate and the inflation rate

Assignment Help Financial Management

Reference no: EM131878340

1. The retail price of the car is $20,000. Toyata is making the following offer: You pay $2,000 down and then $600 month for next 30 months. The APR is 12 percent (compounded monthly). This offer is equivalent to $ ___ off the retail price (when paid in cash today).

2. Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 6% and IR 6%. A stock with a beta of 1 on IP and 0.5 on IR currently is expected to provide a rate of return of 10%. If industrial production actually grows by 7%, while the inflation rate turns out to be 8%, what will be your expected rate of return on the stock, given the new information about the industrial production rate and the inflation rate?

(Enter your answer as a percentage rounded to 1 decimal places.)

Reference no: EM131878340

Questions Cloud

Portfolios-what must be the risk-free rate : Assume both portfolios A and B are well diversified, that E(rA) = 12.6% and E(rB) = 13.6%. what must be the risk-free rate?

Economy has only one risk factor : If the economy has only one risk factor, and ßA = 1 while ßB = 1.1, what must be the risk-free rate?

What would be the expected return on zero-beta stock : What is the expected return on the market portfolio? What would be the expected return on a zero-beta stock?

What is the expected return on the market portfolio : What is the expected return on the market portfolio? What would be the expected return on a zero-beta stock?

About the industrial production rate and the inflation rate : what will be your expected rate of return on the stock, given the new information about the industrial production rate and the inflation rate?

Interest rate that both earnings are worth the same : Is there an interest rate that both earnings are worth the same?

Prepare cash budget for the period : Prepare cash budget for the period from january to march 2018.

The expected rate of return on the market portfolio : Assume the risk-free rate is 5% and the expected rate of return on the market portfolio is 14%.

How much collateral does the dealer need : How much collateral does the dealer need? What repo interest will be paid?

User Account

All Pages