Final answer:
Water does not react with nitrate salts to form insoluble compounds or cause hydrolysis; instead, it enhances the solubility of nitrate salts.
Step-by-step explanation:
The interaction between water and nitrate salts does not result in the formation of insoluble compounds or hydrolysis. Rather, nitrate salts, such as those formed when metals, oxides, hydroxides, or carbonates react with nitric acid, are notably soluble in water. This is why water is used to prepare soluble metal nitrates. Therefore, given the options provided, the correct answer is 'Water enhances the solubility of nitrate salts.'