Why bonds be poor investment in period of high inflation

Assignment Help Financial Management

Reference no: EM13932715

In 2012, an article in the Economist magazine recommended to investors that if economic growth and inflation are low in the United States, investors should buy bonds. But if inflation accelerated rapidly, investors "should buy commodities, especially gold".

1) Why bonds be a poor investment in a period of high inflation? Explain

2) Why would bonds be a good investment in a period of low growth and low inflation? Explain.

Reference no: EM13932715

Questions Cloud

What does the article mean by comparable treasury : In 2012, Anheuser-Busch In Bev NY, maker of Budweiser and other beer, sold debt of varying maturities. According to an article in the Wall Street Journal: "The three-year notes priced with a risk premium of 0.5 percentage point over comparable Treasu..

Role of innovation for sustainable development : Discuss the role of innovation for sustainable development and global management practices at RipCurl. In your answer discuss how managers a tRip Curl can make a difference in the newwork place and how Human Resource Management can drive RipCurl's..

Techniques of the module to the analysis of real-world : The purpose of the Final Project is to apply the concepts and techniques of the module to the analysis of real-world situations or problems. Students are expected to use diverse sources of information and to carry out an original analysis rather t..

Purchased a zero-coupon bond one year : You purchased a zero-coupon bond one year ago for $277.33. The market interest rate is now 8 percent. Required: If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year?

Why bonds be poor investment in period of high inflation : In 2012, an article in the Economist magazine recommended to investors that if economic growth and inflation are low in the United States, investors should buy bonds. But if inflation accelerated rapidly, investors "should buy commodities, especially..

Relevant examples from real companies : In working out your responses to the Discussion Question, you should choose examples from your own experience or find appropriate cases on the Web that you can discuss.

What is the current yield on the bonds : Red Moon Co. has 9.2% coupon bond on the market with 18 years to maturity. The bonds make seminannual payments and currently sell for $106.8% of par. What is the current yield on the bonds? The YTM? The effective annual yield?

Approaches for setting transfer prices : Describe and evaluate the various approaches for setting transfer prices. How can the use of different approaches between the selling and buying divisions be reconciled?

Is the current growth rate of human population sustainable : Is the current growth rate of the human population sustainable? Explain, using the concept of carrying capacity. Explain the relationship between three aspects of science: hypothesis, research/experimentation, and theory

User Account

All Pages