Question
The inflation premium will be higher if the rate of inflation is low.
True false question.
True
False
True false question.
True
False
Answers
GPT-4o mini
False.
The inflation premium is typically higher when the rate of inflation is expected to be high, as investors demand a higher return to compensate for the decreased purchasing power of money over time. If the rate of inflation is low, the inflation premium would generally be lower, as the risk of purchasing power loss is less significant.
The inflation premium is typically higher when the rate of inflation is expected to be high, as investors demand a higher return to compensate for the decreased purchasing power of money over time. If the rate of inflation is low, the inflation premium would generally be lower, as the risk of purchasing power loss is less significant.