How does inflation affect investments? A.) It reduces the monetary value of the rate of return. B.) It creates a negative market psychology and decreases asset prices. C.) It makes investments less liquid. D.) It increases the market price of investments.

The answer is: It reduces the monetary value of the rate of return

Inflation would make the value of a certain currency become weakened when being exchanged with currency of other country. Meaning that for foreign investors, when they receive the a certain amount of dividend from their investment, the monetary value from that dividend would be reduced since they can buy less amount of resources from it.

A) It reduces the monetary value of the rate of return

The reason being the money decreases value and isn't worth the same as it used to