. ________ tells us the relationship between nominal returns, real returns and inflation. A. the Fisher...

. ________ tells us the relationship between nominal returns, real returns and inflation.

A. the Fisher Effect

B. Efficient Market Hypothesis

C. Fisher's separation theorem

D. both the Fisher Effect and Fisher's separation theorem

Solutions

Expert Solution

Answer :-

(A) the fisher effect tells us the relationship between nominal returns, real returns and inflation.

Explanation :-

The fisher effect provides the relationship between nominal return , real return and inflation. In an approximate form , the real rate is calculated by subtracting inflation from nominal returns .

Explanation for rejection of other points :-

Efficient market hypothesis is a hypothesis or theory which states that all the available information is reflected in the stock prices and stock trade at fair market value and it is impossible to beat the market .

Fisher's separation theorem states that management should focus on maximisation of company ' s value . Management should focus on productive opportunities rather than shareholders investment preferences .

So, the answer is ( A) the Fisher effect .

jeff jeffy answered 2 years ago

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