Year Inflation rate Nominal interest rate 2020 5% 10% 2025 0% 2% 2030 20% 15% 2035...

Question

Question

In which year would you prefer to be a lender?

business finance

Answer 1

Answer #1

Real rate in 2020=10%-5%=5.0%

Real rate in 2025=2%-0%=2.0%

Real rate in 2030=15%-20%=-5.0%

Real rate in 2035=1%-(-5%)=6.0%

As real rate is higher in 2035, i will prefer to lender in that year: 2035

the above is answer..

Answer 2

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