When the actual inflation rate turns out to be greater than the expected inflation rate, who gains—the borrower or the lender—and who loses? Explain why
What will be an ideal response?
The borrower gains because he pays back the loan in cheaper dollars—dollars that have lost more purchasing power than was expected. The lender loses because she receives dollars that have lost more purchasing power than was expected.
Economics
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A merger between two commercial airlines is a
A) conglomerate merger. B) diagonal merger. C) horizontal merger. D) vertical merger.
Economics
Using the one-period valuation model, assuming a year-end dividend of $1.00, an expected sales price of $100, and a required rate of return of 5%, the current price of the stock would be
A) $110.00. B) $101.00. C) $100.00. D) $96.19.
Economics