Illustrate which is the safer investment

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Reference no: EM13114509

You are considering the choice between investing 50000 in a conventional 1 year bank cd offering an interest rate of 5% and a 1 year inflation plus CD offering 1.5% per year plus the rate of inflation. WHich is the safer investment? Which offfers the higher expected return?If you expect the rate of inflation to be 3% over the next year, which is the better investment?WHY?

Reference no: EM13114509

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