Exhibit 19-2

question 85

Multiple Choice

Exhibit 19-2.Hugh Wallace has the following information regarding three investment options.Each investment option involves the same one-year period. Refer to Exhibit 19-2.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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