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Basic problem about investment (basic percentages, and econ/finance).

thiagowinters

New member
Jul 20, 2021
1
Liam and Ben are two friends who started studying the world of Finance and have different expectations for inflation in the coming years. Liam estimates inflation of 5% per year and Ben estimates inflation of 4% per year. Suppose they have the following options available for investment:



  1. Fund 1, which pays a rate of 8.6% per year;
  2. Fund 2, which pays a CPI rate (inflation rate) + 3.75% per year.
What should they do?

a) Liam should invest in fund 1 and Ben in fund 2

b) Liam should invest in fund 2 and Ben in fund 1

c) both must invest in fund 1

d) both must invest in fund 2