In economics, when should an investor avoid interest-sensitive securities and long-term debt instrument that pay fixed amounts of interest?

Question

Quizplus · Accepted Answer

During inflation an investor should avoid interest-sensitive securities and long-term debt instrument that pay fixed amounts of interest. Instead, investors should acquire shot-term instruments whose yields will increase with the rate of inflation. The expectations of an inflationary environment suggest that investors should stress common stocks of firms whose asset bases will be enhanced by increased asset values, such as oil, metal, and land. Stock from firms lacking assets should be avoided.

In Economics, When Should an Investor Avoid Interest-Sensitive Securities and Long-Term