Which of the Following Individuals Benefits from Inflation

question 58

Multiple Choice

Which of the following individuals benefits from inflation?

• A) Ben, who borrowed $1,000 from a friend and agreed to pay the same amount one year later
• B) Mark, who lent his friend $1,000 and agreed to accept repayment of the same amount one year later
• C) Randall, who lives on a fixed income of $800 per month
• D) Asuza, who keeps her savings in the form of cash in a safe at home

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Definitions:

DCF Approach

The Discounted Cash Flow approach, a valuation method used to estimate the value of an investment based on its future cash flows.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often calculated using the Capital Asset Pricing Model (CAPM).

WACC Calculation

The process of determining a company's Weighted Average Cost of Capital, incorporating the costs of equity, debt, and any other forms of financing.

Semiannually

Occurring twice a year, generally used in the context of payments, interest accruals, or reports.