In considering inflation in a portfolio management context which of the following statements is true?
A) An investment policy statement seldom contains statements about inflation-adjusted returns.
B) Common stocks do not always provide an inflation hedge.
C) At a 3 percent inflation rate the purchasing power of a dollar will double in less than 25 years.
D) To preserve purchasing power investors ignore growth-oriented mix strategies.

Question

Quizplus · Accepted Answer

Common stocks do not always provide an inflation hedge. This is because the ability of stocks to outpace inflation depends on various factors including the economic environment, sector performance, and individual company health. Stocks have the potential to beat inflation over the long term, but there are periods when they may not keep up with inflation, making them an inconsistent hedge.

In Considering Inflation in a Portfolio Management Context Which of the Following