Business, 31.03.2020 01:28 lilzaya510

Suppose you lend $1,000 at an interest rate of 10 percent over the next year. If the expected real interest rate at the beginning of the loan contract is 4 percent, then what rate of inflation over the upcoming year would be most beneficial to you as the lender? An inflation rate

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Answer from: kristieroth1

The inflation rate that would be most beneficial to the lender is a zero percent rate of inflation.

Inflation is the persistent rise in the price levels of a country. Inflation reduces the value of money and increases the price of goods and services.

Nominal interest rate is real interest rate plus inflation rate.

Nominal interest rate = real interest rate + inflation rate

Inflation rate = 10% - 4% = 6%

If inflation rate is 0, the 6% is extra income that accrues to the lender.

To learn more about inflation, please check: link

Answer from: onlyceleste2430

Explanation:

Inflation rate shows a measure of rate at which the average price of a selected goods and services increases over time. It is usually expressed in percentage and shows how the strength of a currency is decreasing.

For the lender, if the inflation rate increases, the purchasing power of the interest the lender would have gotten would be small, the value of the money would have reduced therefore it would be better for the lender if the inflation rate is 0%

Answer from: Quest

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

i hope this you! : )

Answer from: Quest

Some disadvantages to leasing a car is that you are counting on someone to give you money every week or month depending on what you decided and if they don't have all of it well what if you needed that money now you as well have to pay not in full. a disadvantages to purchasing a new vehicle is if it is used then not all the time will absolutely everything work. its almost like a trail and era. although if it is a new car they will try to though all these specials and deals at you in your lease and it can be very overwhelming if you are not use to it.

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Suppose you lend $1,000 at an interest rate of 10 percent over the next year. If the expected real i...