The reason for the increase in inflation risk over time is due to the fact that:
A) the inflation rate always increases over time.
B) we always have inflation.
C) it is more difficult to forecast inflation over longer periods of time.
D) investors are more focused on nominal returns than real returns.

Question

Quizplus · Accepted Answer

Inflation risk increases over time because it becomes more difficult to accurately forecast inflation over longer periods of time. Economic conditions and variables can change, making it harder to predict future inflation rates. Additionally, unexpected events such as natural disasters or geopolitical events can also have an impact on inflation.

The Reason for the Increase in Inflation Risk Over Time