Question on real rate of return

Reference no: EM1334374

Carl Foster, a trainee at an investment banking firm, is trying to get an idea of what real rate of return investors are expecting in today's marketplace. He has looked up the rate paid on 3-month U.S. Treasury bills and found it to be 5.5%. He has decided to use the rate of change in the Consumer Price Index as a proxy for the inflationary expectations of investors. That annualized rate now stands at 3%. On the basis of the information that Carl has collected, what estimate can he make of the real rate of return?

Reference no: EM1334374

Questions Cloud

Explain what type of technological infrastructure : Explain What type of technological infrastructure would you consider in developing an international marketing strategy

Explain why verizon has always had higher debt : Please describe the internet statement "Verizon has always had higher debt than some of its peers. There was some discussion about this inside the industry few years ago when they were deploying their IPTV services (FiOS).

Bonds-carrying value and interest expense : A company issues $5,000,000, 7.8%, 20-year bonds to yeild 8% on January 1, 2007. Using effective-interest amortization, what will the carrying value of bonds be on December 31, 2007 balance sheet?

Semi-annual interest payments : The semi-annual interest payments that corporate bonds in the U.S. typically pay are conventionally referred to as

Question on real rate of return : Carl Foster, a trainee at an investment banking firm, is trying to get an idea of what real rate of return investors are expecting in today's marketplace. On the basis of the information that Carl has collected, what estimate can he make of the rea..

Explain how can a company use technology such as internet : Explain How can a company use technology such as internet

Explain marketing and advertising technology services : Explain Marketing and Advertising Technology Services and While the majority of the customers speak English

Determining the future value : What is the future value of $1500 after 5 years if the appropriate interest rate is 12%, compounded monthly?

Explain using information technology for marketing : Explain Using Information Technology for Marketing and The organization that you work for is currently marketing products domestically

User Account

All Pages