Hugh Wallace Has the Following Information Regarding Three Investment Options

question 40

Multiple Choice

Hugh Wallace has the following information regarding three investment options. Each investment option involves the same one-year period. Which of the following statements regarding these investment options is true?

• A) Investment option 1 has the highest nominal rate of return.
• B) The expected percent rate of interest during the time of maturity of investment option 3 is 1.48%.
• C) Investment option 3 has the highest expected inflation rate and the lowest real rate of return.
• D) Adjusted for inflation, investment option 1 is the best choice for Hugh.

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