The purchasing power of an amount of money can be reduced due to inflation. Let...
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Finance
The purchasing power of an amount of money can be reduced due to inflation. Let R be the interest rate earned on an investment, i be the inflation rate, and r be the real rate of interest earned that takes the inflation rate into account. If these rates are expressed as effective annual rates, Which of the following relationships is not true? Possible Answers R=rti B 1+R= (1+r)(1+i) C R=r+i+ri D R-1 r= 1+i E 1+R 1+r= 1+i
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