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If a bank offers a home loan with a fixed interest rate of 8 percent with an expected inflation rate of 4 percent. If the

If a bank offers a home loan with a fixed interest rate of 8 percent with an expected inflation rate of 4 percent. If the inflation rate ends up being 5 percent, which accurately describes the impact on the bank?

  • It benefited because the real interest rate increased by 1 percent.
  • b. It benefited because the real interest rate increased by 4 percent.
  • c. It lost financially because the real rate of interest decreased by 1 percent.

  • d. Its expected gains increased because the real rate of interest increased to 9 percent.
  • e. The bank's real interest rate was not impacted by the difference in the inflation rate.

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