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Chapter 02 Determinants of Interest Rates




Question;54. A foreign investor placing money in dollar;denominated assets desires a 4% real rate of return. Global inflation is running;about 3% and the dollar is expected to decline against her home currency by;1.5% over the investment period. What is her minimum required rate of return?;Explain;55. Would you expect the demand curve for businesses;to be steeper than the demand curve for funds by the federal government?;Explain.;56. Who are the major suppliers and demanders of funds;in the United States and what is their typical position?;57. According to current projections, Social Security;and other entitlement programs will soon be severely underfunded. If the;government decides to cut social security benefits to future retirees and raise;social security taxes on all workers, what will probably happen to the supply;of funds available to the capital markets? What will be the effect on interest;rates?


Paper#55107 | Written in 18-Jul-2015

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