Consider the following statement and choose the option that folows.
Statement: The interest rates on fixed deposits have been lowered.
Inferences:
I. Investors may shift to alternative investment options.
II. Fixed deposits are no longer considered safe.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Only I follows.
Inferences:
I. Follows (because when fixed deposit interest rates decrease, investors often look for better returns in other investment options like mutual funds, stocks, etc.)
II. Does not follow (because a reduction in interest rates does not mean fixed deposits have become unsafe—they are still considered a secure investment, just with lower returns.)