Financial Planner

Category - General Principles of Financial Planning

When should an investor purchase tangible assets?
  1. During Inflation
  2. During Deflation
  3. During Recession
  4. During Disinflation
Explanation
Answer: B - During deflation an investor should purchase tangible assets since prices are declining. The anticipation of deflation strongly suggest that investors should acquire those financial assets whose values will not decrease. The safest strategy is to acquire short-term liquid assets, such as bank deposits, because deflation will increase the purchasing power of money.
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