Suppose You Borrow $2000 for One Year and at the End

question 52

Multiple Choice

Suppose you borrow $2000 for one year and at the end of the year you repay the $2000 plus $110 of interest.If the expected inflation rate was 2.2% at the time you took out the loan,what was the real interest rate you paid?

• A) 2.2%
• B) 3.3%
• C) 5.5%
• D) 7.7%

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Definitions:

Merger Premium

The difference between the actual payment made to acquire a company and the pre-merger value of that company, often reflecting the expected synergies from the merger.

Market Price

The present cost at which a service or asset is available for purchase or sale on the market.

Shares Outstanding

The total number of shares of a corporation that have been issued and are currently held by investors, including the public and the company's officers and insiders.