Suppose you want to take out a $5,000 loan for one year. Five banks each charge a nominal interest amount for the loan. Which of the following loans represent the best deal for you?

A. Bank A charges real interest of $400 and uses an expected inflation rate of 5% during that period

B. Bank B charges real interest of $350 and uses an expected inflation rate of 6% during that period

C. Bank C charges real interest of $390 and uses an expected inflation rate of 5.1% during that period

D. Bank D charges real interest of $300 and uses an expected inflation rate of 7% during that period

E. Bank E charges real interest of $405 and uses an expected inflation rate of 4.9% during that period

Question

Keith Decker

10 April, 16:50

+2

Answers (1)

Know the Answer?

Greta Contreras · Answer 1

I think the answer is E not sure tho