Applications of Risk Measures

Given Ferber’s prediction, Chvatel will *most likely* recommend:

Incorrect. Farmland is an appropriate choice for high inflation and high growth, but Ferber is focused on tight monetary policy and loose fiscal policy.

Correct! Corporate debt is the best choice given Ferber’s belief of tight monetary policy and loose fiscal policy. Tight monetary policy should serve to lower inflation, while loose fiscal policy should create more growth. This leads to a higher-growth environment with lower inflation, which benefits corporate debt.

Incorrect. Government bonds will outperform in a low-growth, low-inflation environment.

farmland.

corporate debt.

government bonds.