The reason for the increase in inflation risk over time is due to the fact that:
A) The inflation rate always increase 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

The increase in inflation risk over time is primarily due to the difficulty in accurately forecasting inflation over longer time periods, which increases uncertainty and risk for investors. While inflation does tend to occur over time, it is not a guaranteed or constant factor, and investors can still make use of strategies and tools to manage inflation risk. The focus on nominal returns over real returns may contribute to inflation risk, but it is not the primary driver of the trend.

The Reason for the Increase in Inflation Risk Over Time