If Inflation Turns Out to Be Higher Than Was Anticipated,debtors

question 86

Multiple Choice

If inflation turns out to be higher than was anticipated,debtors are helped because

• A) the real present value of their payments increases.
• B) the real present value of their payments decreases.
• C) the nominal present value of their payments increases.
• D) the nominal present value of their payments decreases.

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Definitions:

Default Risk

The possibility that a debtor will fail to fulfill their financial liabilities as agreed upon.

Financial Ratios

Financial ratios are quantitative measures derived from financial statement analysis to evaluate the financial performance, condition, and valuation of a company.

Loan Decision

The process undertaken by lenders to determine whether to make funds available to borrowers under certain terms.

Analytical Tool

Instruments or methodologies used to analyze or interpret data to make decisions or solve problems.