Where Would You Prefer to Invest, and Why, If Nominal

question 85

Multiple Choice

Where would you prefer to invest, and why, if nominal rates are 10% in Canada and 25% in Holland, while the expected rates of inflation are 5% and 19% respectively? Assume investments of equal risk.

• A)Invest in Holland due to higher nominal rate
• B)Invest in Canada; real return is 1.1% higher
• C)Invest in Canada; real return is 0.1% higher
• D)Invest in Holland; real return is 0.24% higher r_$(real) =

---

Definitions:

Crop Failure

An event where agricultural crops grown do not produce a sufficient yield, often due to weather conditions, pests, disease, or lack of resources.

Agrarian Colony

A settlement primarily engaged in agriculture, established for the purpose of producing crops and livestock.

Native Americans

The indigenous peoples of the United States, including various tribes, who were the original inhabitants of the land prior to European colonization.

Fur Trappers

Individuals or workers engaged in the trapping and trading of animal fur, often in the wilderness, a common occupation during the frontier days of North American exploration and settlement.