If actual inflation is smaller than expected inflation, would lender and borrower lose or benefit from...
If actual inflation is smaller than expected inflation, would lender and borrower lose or benefit from this unexpected change?
Homework Answers
ANSWER:
If the actual inflation is smaller then the expected inflation then the lender benefits as the loan that will be repaid by borrower will be costlier in as the purchasing power of the dollar is not lost then what it was expected and so the lender is benefited more then the borrower.
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If actual inflation is smaller
than expected inflation, would lender and borrower lose or benefit
from...
Suppose that the inflation rate turns out to be much higher than most people expected. In...
Suppose that the inflation rate turns out to be much higher than most people expected. In that case, O A. both borrower and lender will gain from the situation. O B. a borrower will gain from the situation while a lender will lose. O C. a lender will gain from the situation while a borrower will lose. D. both borrower and lender will lose in this situation
A borrower and a lender agree on a mortgage interest rate. If inflation turns out to...
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9. Suppose that a borrower and a lender agree on the nominal interest rate to be...
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If a lender charge a 9% nominal interest rate and expected inflation rate is a 4%,...
If a lender charge a 9% nominal interest rate and expected inflation rate is a 4%, what is the difference between the real rate the lender received and the real rate the lender expected when the actual inflation ended up being 2%
you would rather be a lender when... a. expected inflation is high and the interest rate...
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Suppose that a lender's desired real rate of interest is 2%, the expected rate of inflation...
Suppose that a lender's desired real rate of interest is 2%, the expected rate of inflation is 2% and the actual rate of inflation is 4%: a) What's the nominal rate of interest? b. What's the actual rate real rate of interest? Explain who benefits from expectations error--the lender or the borrower.
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Given the following 4 scenarios: • The contract interest rate was 3.5% and the expected inflation...
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Suppose that the inflation rate turns out to be much higher than most people expected. In that case, O A. both borrower and lender will gain from the situation. O B. a borrower will gain from the situation while a lender will lose. O C. a lender will gain from the situation while a borrower will lose. D. both borrower and lender will lose in this situation
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If the expected rate of inflation was 3% and the actual rate was 6.2%; the systematic response coefficient from inflation, would result in a change in any security return of __ BINFLATION. O 9.2 0 -3.2 O 3.0 O 6.2 O 3.2
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