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NEW QUESTION: 1
Assuming that the nominal risk-free rate of interest is currently at 4.90% per year, with the real inflationfree rate of return at 2.05% per year, what is the inflation premium? Further, assuming that the inflation premium is to fall by 130 basis points, what would be the adjusted nominal risk-free rate of interest?
Assume that both the new inflation rate and the inflation-free rate of interest are considered small by historical standards.
A. 2.05% per year, increase by 130 basis points
B. 2.85% per year, increase by 130 basis points
C. The answer cannot be calculated from the information provided.
D. 2.05% per year, decrease by 130 basis points
E. None of these answers is correct.
F. 2.85% per year, increase by 70 basis points
Answer: E
Explanation:
Explanation/Reference:
Explanation:
Remember that the nominal risk-free rate of interest is comprised of two components, the real "inflation- free" rate of interest and an inflation premium. The inflation premium is equal to the anticipated inflation rate.
The equation for the calculation of the nominal interest rate when the real inflation-free rate of interest and/ or the inflation premium are significantly small is as follows:
Risk-free rate of return = k* + IP
where: k* = the real inflation-free rate of return and IP = the inflation premium In this example, the nominal risk-free interest rate is provided as 4.90%, and the inflation-free rate of return as 2.05%. Incorporating these values into the equation illustrated above will yield a value of 2.85% for the inflation premium.
Increasing the inflation premium by 130 basis points will lead to a 130 basis point increase in the nominal risk-free interest rate. None of the answers correctly illustrate these findings.
When either the real "inflation-free" interest rate or the expected inflation rate are significantly large, the calculation of the nominal risk-free rate differs from the equation used when these factors are significantly small. Specifically, the calculation of the nominal risk-free rate of interest when the inflation-free rate of interest and/or the inflation premium are significantly high, the calculation of the nominal risk-free rate is as follows:
Nominal RFR = (1 + Real RFR)(1 + E(I)) - 1
Where: Real RFR = the real inflation-free rate of interest and E(I) = the anticipated inflation rate
NEW QUESTION: 2
A. Option B
B. Option A
C. Option C
D. Option D
Answer: A,D
Explanation:
Here is a list of the differences between OSPFv2 and OSPFv3:
* They use different address families (OSPFv2 is for IPv4-only, OSPFv3 can be used for IPv6-only or both protocols
* OSPFv3 introduces new LSA types
* OSPFv3 has different packet format
* OSPFv3 uses different flooding scope bits (U/S2/S1)
* OSPFv3 adjacencies are formed over link-local IPv6 communications
* OSPFv3 runs per-link rather than per-subnet
* OSPFv3 supports multiple instances on a single link, Interfaces can have multiple
IPv6 addresses
* OSPFv3 uses multicast addresses FF02::5 (all OSPF routers), FF02::6 (all OSPF
DRs)
* OSPFv3 Neighbor Authentication done with IPsec (AH)
* OSPFv2 Router ID (RID) must be manually configured, still a 32-bit number
Reference: http://www.networkworld.com/article/2225270/cisco-subnet/ospfv3-for-ipv4-and- ipv6.html
NEW QUESTION: 3
Which two demonstrate an "is a" relationship? (Choose Two)
A. public interface Person { }
public class Employee extends Person { }
B. public interface Color { }
public class Employee extends Color { }
C. public interface Shape { }
public class Employee extends Shape { }
D. interface Component { }
Class Container implements Component (
Private Component[ ] children;
)
E. public class Species { }
public class Animal (private Species species;)
Answer: D,E