In years 1 and 2, the consumer price index is 125 and 160, respectively. Every inflation is expected. What is the real interest rate at Commerce Bank of Beverly Hills if year two's interest rate is 35 percent?

Find the interest rate or rate of return.

You lend $\$ 700$ and receive a promise to be paid $\$ 749$ at the end of one year.

A $6000 certificate of deposit is purchased for$6000 and is held for seven years. If the certificate earns an effective rate of 8%, what is it worth at the end of the period?

A home buyer takes out a $30,000 mortgage at an annual interest rate of 9%. This loan is to be repaid over 20 years in 240 equal monthly installments of x dollars. (a) Compute x. (b) Find x if the annual interest rate is 10%

Suppose you deposit m dollars at the beginning of every month in a savings account that earns a monthly interest rate of r, which is the annual interest rate divided by 12 (for example, if the annual interest rate is 2.4%, r=0.024/12=0.002). For an initial investment of m dollars, the amount of money in your account at the beginning of the second month is the sum of your second deposit and your initial deposit plus interest, or m+n(1+r). Continuing in this fashion, it can be shown that the amount of money in your account after n months is $A_{n}=m+m(1+r)+\cdots+m(1+r)^{n-1}$. Use geometric sums to determine the amount of money in your savings account after 5 years (60 months) using the given monthly deposit and interest rate. Monthly deposits of $100 at an annual interest rate of 1.8%

Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a year.

$10,000 bond with coupon rate 5.4% that matures in 12 years; current interest rate is 6.5%.

All rates of interest given here are annual rates. Calculate the rate of interest per year which will earn the given amount of interest: a) Principal $400 time 4 years interest$112, b) Principal $800 time 7 years interest$224

What does it mean if this year the CPI is 125 and last year it was 120?
A. All goods have become more expensive.
B. The price level has increased.
C. The inflation rate has increased.
D. All of the above statements are correct.

The Fort House Tea Room borrowed $17,500 for renovations at a simple interest rate of 6.85% for 4 years. The interest is to be paid annually. Find the amount of each annual interest payment.

Which of the following bank accounts has the highest effective annual return?

a. An account that pays 8% nominal interest with monthly compounding.
b. An account that pays 8% nominal interest with annual compounding.
c. An account that pays 7% nominal interest with daily (365-day) compounding.
d. An account that pays 7% nominal interest with monthly compounding.
e. An account that pays 8% nominal interest with daily (365-day) compounding.

Use the compound interest formula, $A(t)=P\left(1+\frac{r}{n}\right)^{n t}$.

Use properties of rational exponents to solve the compound interest formula for the interest rate, $r$.

Define each of the following terms:

Coupon payment; coupon interest rate

Suppose you deposit in dollars at the beginning of every month in a savings account that earns a monthly interest rate of r which is the annual interest rate divided by 12 (for example, if the annual interest rate is 2.4%, r=0.024 /12=0.002). For an initial investment of m dollars, the amount of money the your account at the beginning of the second month is the sum of your second deposit and your initial deposit plus interest, or m + m(1 + r). Continuing this fashion, it can be shown that the amount of money in your account after n months is $A_{n}=m+m(1+r)+\cdots+m(1+r)^{n-1}$. Use geometric sums to determine the amount of money in your savings account after 5 years (60 months) using the given monthly deposit and interest rate. Monthly deposits of $250 at a monthly interest rate of 0.2%.

The monthly payment that amortizes a loan of A dollars in t years when the interest rate is r/year compounded monthly, is given by $P=f(A, r, t)=\frac{A r}{12\left[1-\left(1+\frac{r}{12}\right)^{-12 t}\right]}$ a. What is the monthly payment for a home mortgage of $300,000 that will be amortized over 30 years with an interest rate of 4%/year? An interest rate of 6%/year? b. Find the monthly payment for a home mortgage of$300,000 that will be amortized over 20 years with an interest rate of 6%/year.