Question

"During extended periods of high inflation, it can be expected that common stock price movements, as measured by the NYSE Composite Index, will show a:"

Answer 1

negative correlation

Step-by-step explanation:

In such a scenario common stock price movements will show a negative correlation. Meaning that as inflation levels rise the price values of these common stock assets will decrease, which the same can apply the other way around. This tends to occur because a stock's price is just the risk-adjusted present value of the company's future cash flows, thus a rise in inflation will always cause it to drop.