Ask Question
23 February, 02:52

When inflation increases, the market value of outstanding fixed income securities will MOST likely: (A) Increase (B) Decrease (C) Remain the same (D) Become very volatile

+1
Answers (1)
  1. 23 February, 06:34
    0
    (B) Decrease

    Explanation:

    Interest rate is inversely related to the market value of fixed interest income securities like bonds, certificate of deposits, preferred stocks e. t. c.

    The higher the inflation, the higher the interest rates all things being equal. An increase in interest rate will drive down the market value of fixed income securities because inflation reduces the real returns on fixed income securities.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “When inflation increases, the market value of outstanding fixed income securities will MOST likely: (A) Increase (B) Decrease (C) Remain ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers