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Q1 WHAT ARE THE ADVANTAGES OF INFLATION
Q2 WHAT IS ABSOLUTE CHANGE AND ANNUAL CHANGE IN MUTUAL FUNDS
Q3 WHAT IS EX - DIVIDEND DATE
Q4 WHAT IS RECORD DATE IN MUTUAL FUNDS
Q5 WHOM U'LL FOLLOW IN UR LIFE A SUCCESSFULL PERSON OR A UN-
SUCCESSFULL PERSON
Q6 TYPES OF MUTUAL FUNDS AND HOW TO CALCULATE NAV
Q7 INTREST VS BONDS
Q8 WHAT ARE VENILLA OPTIONS
Q9 WHAT ARE GREEN SHOE OPTION
Q10 WHY CURRENCY FURURES ARE TRADED AT SINGAPORE STOCCK
EXCHANGE
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Answer Posted / parveen sharma
Inflation is the sustained increase in price level.
It usually has negative aspects to inflation, but it has
some positive effects as well. Firstly, inflation is more
desirable than deflation in most situations. This does not
include hyper inflation by the way.
Secondly, inflation shows economic growth, or at least it
reflects some economic activity.
The major positive aspect is that it helps smaller firms
grow to larger firms. Assuming that both firms A and B
sells similar goods. A is a large cooperation with
economies of scales and B a smaller firm without economies
of scale. Therefore the prices of goods A would be less
than good B. Assuming that the inflation rate is 10%. The
price of good A is $9 and inflation causes it to increase
to $9.90. And for good B, since the cost of production is
higher, it costs $10. And with inflation pushing it up to
$11. The proportion of increase is similar, but the real
price increase is different, firm A $0.90 and firm B $1.
Thus firm B having a $0.10 increased revenue more than firm
A.
Resulting in a larger benefit, ceteris peribus cost of
production does not increase in proportion and other
factors equalized.
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