ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The rise in the general level of prices
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The uncertainty about the return on an investment
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The number of times something happens to money
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The projected value of an investment at the end of a specified time frame
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Detailed explanation-1: -Which statement best describes how inflation affects the value of investments over time? It decreases the value of money. The nominal interest rate could best be described as the rate.
Detailed explanation-2: -In spite of the growth in your investments, you have to spend more due to the increase in inflation. It can also be said as negative rate of return. The real return you get from investment is reduced due to inflation.
Detailed explanation-3: -Mutual funds investing in corporate and credit-risk bonds can help you beat inflation. These products gain popularity in the high-interest environment and outperform traditional products like fixed deposits considering high yields and liquidity.
Detailed explanation-4: -Real rate of return is the annual rate of return taken into consideration after taxes and inflation.