Which One of the Following Would Benefit Financially from Unanticipated

question 224

Multiple Choice

Which one of the following would benefit financially from unanticipated inflation?

• A) a borrower whose loan has a fixed nominal interest rate
• B) a borrower with an adjustable rate mortgage
• C) a bank that has made loans at a fixed nominal interest rate
• D) a firm whose workers are covered by a COLA agreement

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Definitions:

Voting Stock

Shares that give the shareholder the right to vote on corporate matters, typically regarding the election of the board of directors.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenues.

Cash Dividend

A distribution of a company's profits paid to shareholders in the form of cash.