Assessing Capital Market Expectations

As an investment analyst, you are tasked with assessing the economic conditions that might influence capital market returns over the next decade. You believe that interest rates will continue to rise due to a tightening monetary policy aimed at combating inflation. Further, you predict that equity markets might experience increased volatility as a result of potential geopolitical tensions.

Based on these assessments, which of the following capital market expectations is likely to be most accurate?