Financial Risk Manager Part 1
Get started today
Ultimate access to all questions.
Ultimate access to all questions.
A major global financial institution operates in four different countries. The Chief Financial Officer (CFO) is considering the issuance of a bond in one of these nations. The CFO believes that selecting the country with the lowest real interest rate would be the most beneficial for the bank. The relevant information regarding nominal interest rates and inflation rates for the four countries is presented in the following table:
| Country | Nominal Interest Rate | Inflation Rate |
|---|---|---|
| A | 3.9% | 1.9% |
| B | 4.1% | 2.0% |
| C | 4.2% | 2.3% |
| D | 4.6% | 2.5% |
Assuming that all other factors remain unchanged, which of the four countries should be selected for the bond issuance?