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Finance Textbook Bernanke Boom
Posted on 5/10/12 at 2:54 pm
Posted on 5/10/12 at 2:54 pm
Taking my Finance Final in a couple hours. Was going over basic bond valuation to make sure I don't screw it up on WACC (although I probably will) and saw this problem:
11. An investment offers a 14 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 9 percent. What does Bill believe the inflation rate will be over the next year?
11. An investment offers a 14 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 9 percent. What does Bill believe the inflation rate will be over the next year?
4
Posted on 5/10/12 at 2:58 pm to acgeaux129
Well if you're using a WACC for a bond valuation, you're definitely fricked.
Posted on 5/10/12 at 3:03 pm to kfizzle85
Nah man. Finding cost of debt by using YTM.
Posted on 5/10/12 at 4:29 pm to acgeaux129
quote:
Bill Bernanke
Ben's Brother?
Posted on 5/10/12 at 4:38 pm to Tigris
quote:
Ben's Brother?
Obviously, bizarro world twin.
No way does Ben see 5% inflation in the future.
Posted on 5/10/12 at 7:42 pm to acgeaux129
4.59%
Posted on 5/10/12 at 7:42 pm to acgeaux129
4.59%
Posted on 5/10/12 at 9:33 pm to Tigris
quote:
Ben's Brother?
apparently.
did mediocre on the test for those who were interested. knew the calculations for supernormal growth and WACC very well though.
Posted on 5/10/12 at 10:02 pm to acgeaux129
Anything x 0 = 0. Thats all I got.
Posted on 5/10/12 at 10:30 pm to CamdenTiger
Yeah. Just don't divide by it, we've all seen the gif. I got a plane to catch tomorrow night so I'd prefer if every one avoided this for the time being. Appreciate the help.
Posted on 5/12/12 at 6:51 pm to kfizzle85
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