Question
Karen is an investment manager and she has five investment choices. She has $100 to invest. Assume that the assumptions about the future are correct.
Karen is an investment manager and she has five investment choices. She has $100 to invest.
Assume that the assumptions about the future are correct. Nominal Interest rates are interest rates without taking inflation into account.
Which investmen below would provide the highest real returns during the next 12 months?
a) Inflation is 1% and she receives 4% nominal interest rate in a bank account
b) Inflation is 11% and she receives 14% nominal interest rate in a bank account
c) Inflation is 5% and she receives 12% nominal interest rate in a bank account
d) Inflation is 8% and she receives 13% nominal interest rate in a bank account
e) Inflation is 12% and she receives 13% nominal interest rate in a bank account
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