Answer: Considering the importance of interest rates on debt securities, as well as the possibility of investment losses brought on by an increase in the going rates for new debt instruments.
inflation role: and that the value of investment returns is diminished by inflation.
Step-by-step explanation:
Interest rate risk is the possibility of investment losses brought on by an increase in the going rates for brand-new debt instruments. For instance, if interest rates increase, the secondary market value of a bond or other fixed-income investment will decrease.
Consumer spending, company investment, employment rates, as well as government initiatives, tax laws, and interest rates are all impacted by inflation. Because inflation can lower the value of investment returns, understanding inflation is essential to successful investing.