According to Modigliani and Cohn, a high level of inflation causes equities to be undervalued.

Name: According to Modigliani and Cohn, a high level of inflation causes equities to be undervalued.
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Modigliani and Cohn argue that during periods of high inflation, investors tend to overestimate the impact of inflation on nominal interest rates, leading to an undervaluation of equities as they discount future cash flows at excessively high rates.

According to Modigliani and Cohn, a High Level of Inflation