Pecentage Fomat Case Study
Thirdly, for the interest profit calculation, the assumption that all of the money supply was kept in the bank for the whole 10 years was made. This means all the profit from interest is only usable at the end of the tenth year but as for bond, the profit was received annually. This is an advantage for the bond as the money received earlier could be used for other purposes.
The interest profit is calculated by multiplying the interest rate of the chosen year and 9 years after that in percentage …show more content…
As can be seen in Table 10, the averaged bond rate is always higher than the averaged inflation rate. This make sense as for real profit from bond would be the taking away the inflation rate from the bond rate. If the bond rate is lower or the same magnitude as inflation rate, then there would be no profit and perhaps even a loss. The real bond profit decreases as the years pass. This is due to the reduction in the bond rate as the inflation rate does not fluctuates much after year 1992. The averaged bond rate and averaged inflation rate were than plotted against each other as shown in Figure 8