QE stion 3 yet saved 1 ked out of 0 9 Flag estion 17 You have $1 million in cash and are considering investment in bank deposits or a house. Deposits at the bank earn 5% pa and rental yields on houses also earn 5% pa. Assume that: -Both bank interest rates and rental yields are not expected to change in the future. -House rents and prices are expected to remain constant in the future. - Bank deposit investments and house investments have the same risk. Then unexpectedly, the central bank decreases interest rates by 1 percentage point. Banks decrease their deposit rate to 4% pa. House rents remain unchanged. What do you expect to happen to house prices as soon as the news is released? Sav Tim HEL If y exa toc Select one: a. Remain unchanged. b. Rise by 1% c. Fall by 1% d. Rise by 25%. e. Fall by 25% For .. oo 27