Assume nominal rates are 10% in the United States and 25% in Holland, while the expected rates of inflation are 5% and 19%, respectively. Assuming investments of equal risk, you should invest in:
A) the United States because of the lower inflation rate.
B) the United States because the real return is 1.1% higher.
C) the United States because the real return is 0.37% higher.
D) Holland because the real return is 0.28% higher.
Correct Answer:
Verified
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