The relationship of the effects of taxation and positive rates of inflation on investment returns for a fixed interest security will be:

Question

Quizplus · Accepted Answer

Taxation and positive rates of inflation both have an inverse relationship with investment returns for a fixed interest security. Taxation reduces the net return to the investor, and inflation erodes the real value of the returns, making both factors detrimental to investment performance.

The Relationship of the Effects of Taxation and Positive Rates