The Expected Inflation Rate in Finland Is 2 Percent While

question 143

Multiple Choice

The expected inflation rate in Finland is 2 percent while it is 4 percent in Canada. A risk-free asset in Canada is yielding 5.5 percent. What real rate of return should you expect on a risk-free Finnish
Security?

• A) 2.0 percent
• B) 2.5 percent
• C) 3.0 percent
• D) 3.5 percent
• E) 4.0 percent

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Definitions:

Francis Ferdinand

Archduke Franz Ferdinand of Austria was the heir to the Austro-Hungarian Empire, whose assassination in 1914 sparked the beginning of World War I.

German Government

The political leadership and institutions that govern Germany, including the federal and state levels, following democratic and legal principles.

Austria-Hungary

A multinational empire in Central Europe formed by a dual monarchy of Austria and Hungary, which existed from 1867 until its dissolution in 1918 following World War I.

Triple Alliance

A military coalition formed by Germany, Austria-Hungary, and Italy in 1882, aimed at mutual defense and support in case of attack by other powers.