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Questions and Answers
How does inflation impact investment decision making?
How does inflation impact investment decision making?
- It reduces the real return on investment (correct)
- It increases the real return on investment
- It has no impact on investment decision making
- It decreases the tax liabilities on investment
What effect do taxes have on investment decision making?
What effect do taxes have on investment decision making?
- Lower taxes decrease the real return on investment
- Taxes have no impact on investment decision making
- Higher taxes increase the real return on investment
- Higher taxes reduce the after-tax return on investment (correct)
How does investment analysis consider the impact of inflation and taxes?
How does investment analysis consider the impact of inflation and taxes?
- It ignores the impact of tax and inflation on investment decisions
- It solely focuses on pre-tax returns
- It adjusts return expectations based on tax and inflation rates (correct)
- It only considers the impact of inflation
