Dean borrows $400 from Andre. Andre wants to make a 10% real return on his money, so
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Dean borrows $400 from Andre. Andre wants to make a 10% real return on his money, so they both agree on a 10% interest rate paid next year. Dean and Andre did not anticipate any inflation, yet the actual inflation turned out to be 4% the following year. Who does the unexpected inflation benefit and why? Select one: O
a. Dean, because the real interest rate is lower.
b. Neither, because the inflation was unexpected. O
c. Dean, because the real interest rate is higher.
d. Andre, because the real interest rate is higher e. Andre, because the real interest rate is lower.
Related Book For
Project Management The Managerial Process
ISBN: 9781260570434
8th Edition
Authors: Eric W Larson, Clifford F. Gray
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