A lender may be hurt by inflation in all of the following situations except one.Which is the exception?

Question

Quizplus · Accepted Answer

If the lender correctly anticipates inflation and increases the nominal interest rate accordingly, the lender will not be hurt by inflation. In all other situations, the lender may be negatively affected by inflation. If the term of the loan is more than one year, inflation can erode the real value of the payments the lender receives. If the rate of inflation is greater than anticipated by both borrower and lender or greater than the nominal interest rate, the lender's real return may be lower than expected.

A Lender May Be Hurt by Inflation in All of the Following