The risk that increases in the average price level for all goods and services will reduce the purchasing power of the investor's return on an investment is known as:
A) Market risk
B) Inflation risk
C) Investment risk
D) Default risk
E) Currency risk
F) Political risk
G) None of the above
H) Money risk

Question

Quizplus · Accepted Answer

Inflation risk, also known as purchasing power risk, refers to the possibility that the value of assets or income will decrease as inflation shrinks the purchasing power of a currency. This means that even if an investment yields a return, that return may not keep pace with the increase in prices, effectively reducing the real value of the money returned.

The Risk That Increases in the Average Price Level for All