Suppose the One-Year T-Bill Rate Was 5% on 1/1/2007,4% on 1/1/2008,and

question 43

Essay

Suppose the one-year T-bill rate was 5% on 1/1/2007,4% on 1/1/2008,and 6% on 1/1/2009.The GDP deflator (2004 = 100)was 110 on 1/1/2007,112 on 1/1/2008,114 on 1/1/2009,and 120 on 1/1/2010.The tax rate on interest income is 30%.
(a)Calculate the nominal after-tax rate of return for 2007,2008,and 2009.
(b)If you began with $1000 on 1/1/2007 and invested in T-bills each year (paying taxes at the end of each year),how much would you have in nominal terms on 1/1/2010? How much would you have in real terms (2004 dollars)?
(c)How much was your nominal after-tax interest earned in part (b)over the three years? How much did you earn in real (2004)after-tax dollars?

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A statement in programming that specifies the type and possibly the initial value of one or more variables or constants.

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A keyword in C and C++ programming languages used to declare a variable or function in another file.

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The process of declaring a memory space for storing values, with a specific type in programming.

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A pointer variable is a variable that stores the memory address of another variable, enabling direct memory access and manipulation in programming.