If inflation averages three per cent over the next twenty years, and investors continue to be taxed on their investment returns, which of the following investments may be a hedge against inflation?

Question

Quizplus · Accepted Answer

A diversified portfolio of stocks is often considered a hedge against inflation because, over time, the returns on stocks tend to outpace inflation. Stocks represent ownership in companies, and many companies can adjust their prices and operations to cope with inflation, potentially leading to higher profits and stock prices. T-Bills and long-term U.S. Treasuries, on the other hand, offer fixed returns that may not keep pace with inflation.

If Inflation Averages Three Per Cent Over the Next Twenty