## One year ago Sam purchased bonds for \$100,000. He just sold them for \$120,000.

Question: One year ago Sam purchased bonds for \$100,000. He just sold them for \$120,000. During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?

Sam purchased bonds worth  = 100000
He sold them for = 120000
Sam made a profit of = 20000
Sam was taxed 20%   =   4000
Sam’s net profit    =   16000
Nominal rate of return 16000/100000  =  0.16
The price level rose by 5%    =   0.05
Real interest rate ( 1 + nominal rate)/(1+inflation rate) – 1  =  10.48%
So the real rate of return was 10.48%

## A bicyclist traveled with a speed of 12 km/h from a camping ground to a station, located 60 km away.

A bicyclist traveled with a speed of 12 km/h from a camping ground to a station, located 60 km away. Write a formula expressing the dependence of the variable s on t, where s is the distance between the bicyclist and the station in km, t – the duration (time) of his travel in hours.

Using the formula, find: d for t=3.5

## What is the change in the money supply when the Fed purchases \$700 worth of bonds and the required reserve ratio is 14

What is the change in the money supply when the Fed purchases \$700 worth of bonds and the required reserve ratio is 14 percent assuming banks hold no excess reserves?

Money multiplier m=1/1-r

where r is required reserve ratio

When fed purchases \$700 of bonds, it gets 700 money supply.

Change in money supply =mulipler*700

=1/(1-0.14)*700

=\$5,000

## Sandra bought a house 20 years ago for \$200,000, paid local property taxes for 20 years, and just sold it for \$350,000. Which is true?

Sandra bought a house 20 years ago for \$200,000, paid local property taxes for 20 years, and just sold it for \$350,000. Which is true?

She will pay capital gains taxes on the original price.

She will owe capital gains taxes on the sale earnings.

She paid more taxes in her yearly federal income taxes.

She had fewer deductions in her yearly federal property taxes.

## An investor purchase shares in a company for \$5/share, the shares appreciate 25% in the first year and 40% the next.

An investor purchase shares in a company for \$5/share, the shares appreciate 25% in the first year and 40% the next. What is the price of the shares after 2 years​?