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Chapter 17: Q.7 (page 425)

If you receive \(500 in simple interest on a loan that you made for \)10,000 for five years, what was the interest rate you charged?

Short Answer

Expert verified

Interest rate is obtained as 1%

Step by step solution

01

Concept introduction

The Random Walk Theory: The random walk theory asserts that past fluctuations or patterns in stock market prices cannot be used to foretell or predict future stock market prices of movement. Alternatively, it might relate to the future unpredictability of stock market pricing.

02

Calculation 

The interest rate charged is 1 percent.

Simple Interest = Principal ×Rate ×Time

Interest amount = $ 500

Time period = 5 year

Principal amount = $10,000

Interest Rate = ?

Interest rate =SimpleinterestPrinciple×time×100

Interest rate =$500$10000×5×100

Interest rate = 1%

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Most popular questions from this chapter

You and your friend have opened an account on E-Trade and have each decided to select five similar companies in which to invest. You are diligent in monitoring your selections, tracking prices, current events, and actions the company has taken. Your friend chooses his companies randomly, pays no attention to the financial news, and spends his leisure time focused on everything besides his investments. Explain what might be the performance for each of your portfolios at the end of the year.

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