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FINA4920-Assign4

FINA4920-Assign4 - FINA4920 ComputersinFinance Assignment4...

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FINA 4920 Computers in Finance Assignment 4 Inflation  Due date: Tuesday, March 30, 2010 (before class) Submit it via email to  [email protected]   1. The bank is offering you a new savings account, which will give you a 2% real annual interest  rate. If the inflation rate is expected to be 5% annually,  a. How long will it take you to double your money in nominal terms? b. How long will it take you to double your money in real terms? 2. Create a sheet and input the following information from the Japanese economy into Excel.  a) Use it to calculate the inflation rate each year (from 1991-2001), thus completing the table. b) What was the annual inflation rate in Japan for the period of 1990-2001? Year CPI 1990 92.1 1991 95.1 1992 96.7 1993 98 1994 98.6 1995 98.5 1996 98.6 1997 100.4 1998 101.0 1999 100.7 2000 100 2001 99.3 3. Like the United States, the Panamanian government issues a Treasury Inflation Protected  Security (TIPS).  Although Panama uses the U.S. dollar as a currency, the Panamanian TIPS  rate is tied to the Panamanian inflation rate.  The real interest rate of the Panamanian TIPS is  5% and the real interest on the U.S. TIPS is 3%.  You know that the annual inflation rate in 
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