Sentences with phrase «power of future cash flows»

If market participants believe that there is higher inflation on the horizon, interest rates and bond yields will rise (and prices will decrease) to compensate for the loss of the purchasing power of future cash flows.

Not exact matches

Inflation risk: is the chance that cash flow from an investment won't be worth as much in the future because of changes in purchasing power due to inflation.

Inflation risk Inflation causes tomorrow's dollar to be worth less than today's; in other words, it reduces the purchasing power of a bond investor's future interest payments and principal, collectively known as «cash flows.»

How this cash flow is discounted is up to the individual investor and their view of future inflation rates that erode the purchasing power value of future cash flows.