What will be purchasing power equivalent

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Reference no: EM131940847

1. You sign a labor contract with your new boss who promises to start you out at $50,000 per year and will give you a 3% increase in your salary every year for the next six years. If inflation averages 2% each year, what will be the purchasing power equivalent of your 2020 salary expressed in "year 2014" dollars?

$67,005

$53,076

$59,703

$56,308

2. You are british and hold a us bond with a price of $97 and a duration of 5. it currently yields 5%. the next day yields in the US rise by 10 basis points and the USD depreciates by .25% against the GBP.

What is your loss in GBP if you did not hedge?

Reference no: EM131940847

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