Problem regarding the high inflation rate

Reference no: EM131023412

Suppose that Apple and the investors buying the firm's bonds both expect a 2 percent inflation rate for the year. Given this expectation, suppose the nominal interest rate on the bonds is 6 percent and the real interest rate is 4 percent. Suppose that a year after the investors purchase the bonds, the inflation rate turns out to be 6 percent, rather than the 2 percent that had been expected. Who gains and who loses from the unexpectedly high inflation rate?

Reference no: EM131023412

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