Question #fc123

1 Answer
Nov 3, 2015

Answer:

Choice 1#" "pi= y#
Choice 2#" " pi= yB(1+r)#

Explanation:

Given:

#1 +pi/(y(1+r)) times ( (1+r)(1 + pi)-1) =0#

#pi/(y(1+r)) times ( (1+r)(1 + pi)-1) =1#

#(pi ( cancel((1+r))(1 + pi)-1))/(y cancel((1+r))) =1#

#pi^2/ y=1#

#pi=1 times y#

Now you have a choice:

Choice 1#" "pi= y#
Choice 2#" " pi= yB(1+r)#