Question 1:

A particular asset pays a fixed amount equal to $1000 in one year and a fixed amount equal to $2000 two years from now. If the real interest rate rises from 4 percent to 5 percent per annum, the real capital gain on the asset to its holder

1. will be about $44.

2. will be about $ -44.

3. cannot be calculated because we aren't given the nominal interest rate.

4. cannot be calculated because we have no model of the fundamentals.

Choose the correct option.