Purchasing power risk is particularly an issue for which of the following investments?

Question

Quizplus · Accepted Answer

Purchasing power risk, also known as inflation risk, is a concern for fixed-income investments like AAA corporate bonds because the fixed interest payments might lose value over time due to inflation. In contrast, stocks can potentially offer returns that outpace inflation, and inflation-protected U.S. government bonds are specifically designed to adjust for inflation, mitigating this risk.

Purchasing Power Risk Is Particularly an Issue for Which of the Following