Question
Suppose you have USD 100 million to save or spend. If you lend, you will receive 112 million after a year. Inflation is 14% /
Suppose you have USD 100 million to save or spend. If you lend, you will receive 112 million after a year. Inflation is 14% / year.
a. What is the nominal interest rate you get?
b. What is the real interest rate?
c. Should you save or spend that money?
d. Question (c) how will be answered if inflation is 10% / year, nominal interest rates do not change?
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
