Where would you prefer to invest, and why, if nominal rates are 10% in Canada 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 Canada; real return is 1.1% higher.
C)Invest in Canada; real return is 0.1% higher.
D)Invest in Holland; real return is 0.28% higher.

Question

Quizplus · Accepted Answer

The Answer of Where would you prefer to invest, and why, if nominal rates are 10% in Canada 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 Canada; real return is 1.1% higher.
C)Invest in Canada; real return is 0.1% higher.
D)Invest in Holland; real return is 0.28% higher.

Where Would You Prefer to Invest, and Why, If Nominal