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Inflation has remained low for the past 5 years but you have come to the conclusion...

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Finance

Inflation has remained low for the past 5 years but you havecome to the conclusion that trend is ending and inflation willincrease significantly over the next 2 years. Assume you havereached this conclusion prior to other investors reaching the sameconclusion. What adjustments should you make to your bond portfolioin light of your conclusions?

Answer & Explanation Solved by verified expert
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Bonds are considered to be a safe investment class for an investor It pays a fixed interest periodically and the principal amount is generally expected to be safely returned by the issuer at the maturity of the bond However it is very crucial for investors to understand the risks associated with fixedincome investments The inflation is one of the major threats to bond investments and are explained as follows Impact on inflation on capital investment    See Answer
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