An Investor Anticipates That Inflation Will Be 5 Per Cent

question 35

Multiple Choice

An investor anticipates that inflation will be 5 per cent over the next year, and expects a return of 2 per cent for the pure time value of money. She also expects a risk premium of 4 per cent per year. What overall return is required in the first year?

• A) 11%
• B) 12.1%
• C) 14%
• D) 11.1%

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Definitions:

Osteocyte

A mature bone cell enclosed in the bone matrix, responsible for maintaining bone tissue.

Osteoclast

A type of bone cell that breaks down bone tissue, playing a critical role in bone growth, healing, and remodeling.

Chondroclast

Chondroclasts are cells involved in the resorption of cartilage, playing a role in the development, maintenance, and repair of cartilaginous structures.

Osteoclast

A type of bone cell responsible for the resorption, or breakdown, of bone tissue, which is a part of the process of bone remodelling.