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  • 07-12-2020
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How does inflation affect investments?

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ovivensjr
ovivensjr ovivensjr
  • 07-12-2020

Answer:

Rising inflation erodes the purchasing power of a bond's future (fixed) coupon income, reducing the present value of its future fixed cash flows. Accelerating inflation is even more detrimental to longer-term bonds, given the cumulative impact of lower purchasing power for cash flows received far in the future

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