Question: Practice Question 11 Inflation must always be a consideration for bondholders because: It improves a bondholder's future purchasing power from the bond related cash flows.

Practice Question 11 Inflation must always be a consideration for bondholders because: It improves a bondholder's future purchasing power from the bond related cash flows. It reduces the bondholder's future purchasing power from the bond related cash flows. It reduces a bondholder's true tax liability. Higher inflation will lead to higher bond prices, so a bondholder stands to see the debt instruments she holds appreciate in value if inflation rates increase

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