Your financial investments consist of Government of Canada bonds,which will mature in twenty years,and shares in a start-up internet company.If inflation is forecast to be much higher than previously expected,then the price of your bonds will ________ and the price of the shares you own will ________.(Assume that inflation does not affect your forecast of the dollar value of the internet company's future dividends and stock prices. )

Question

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If inflation is higher than expected, the value of the fixed payments on the bonds is eroded, so the price of the bonds will decrease. Furthermore, the internet company may face higher costs due to inflation, which may decrease their profitability and ultimately decrease the value of the shares. Therefore, the price of the shares will decrease as well.

Your Financial Investments Consist of Government of Canada Bonds,which Will