Where would you prefer to invest,and why,if nominal rates are 10% in the United States and 25% in Holland,while the expected rates of inflation are 5% and 19%,respectively? Assume investments of equal risk.
A) Invest in Holland due to higher nominal rate.
B) Invest in United States; real return is 1.1% higher.
C) Invest in United States; real return is 0.1% higher.
D) Invest in Holland; real return is 0.24% higher.
Correct Answer:
Verified
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