Everything else held constant,an increase in expected inflation,lowers the expected return on ________ compared to ________ assets.
A) bonds; financial
B) bonds; real
C) physical; financial
D) physical; real

Question

Quizplus · Accepted Answer

An increase in expected inflation lowers the expected return on bonds compared to real assets because bonds are fixed-income investments, and inflation erodes the value of fixed payments over time. Real assets, on the other hand, are assets that have a physical presence and are not subject to the same erosion of value from inflation.

Everything Else Held Constant,an Increase in Expected Inflation,lowers the Expected