Question: Mr Slow considers choosing between two investments : One guaranteed investment A offers him a retum of 8% per year, while another inflation-protected investment B

Mr Slow considers choosing between two investments : One guaranteed investment A offers him a retum of 8% per year, while another inflation-protected investment B that stipulates 5% per year plus annual inflation rate . Both investments are required to be held for two years . If Mr Slow anticipates inflation in the first year to be %, what is the maximum inflation rate that can occur in the second year in order to make Mr. Slow indifferent to cither investment? bWhich investment is likely safer , at least from a potential return standpoint ?

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