You are looking at an account statement from your bank, Mado…

You are looking at an account statement from your bank, Madoff Mutual.  You note that the statement has listed an nominal rate of 8.0%.  You believe inflation is going to be 5.25%.  You were planning to invest $100 in this account.  If you are correct about inflation, how much would you have in the account at the end of 1 year, and how much would it be worth in today’s dollars?

Use the “Giadeo” spreadsheet to complete this problem. You o…

Use the “Giadeo” spreadsheet to complete this problem. You observe the following information about some market securities and want to try to take advantage of any arbitrage opportunities available; assume that investments have the same risk.  Assume you cannot buy partial shares.  In order to take advantage of an arbitrage opportunity, you would: Price Year 1 Year 2 Baileys  $         1,461  $         1,680  $            –   Jack  $            635  $                –    $         840 Captain  $         4,925  $         4,200  $     1,680 Jose  $         5,200  $         3,200  $     3,200