Asked by Kristine Mae Almodiel on Jun 05, 2024

verifed

Verified

The possibility that you are too conservative and your money doesn't grow fast enough to keep pace with inflation is called ________.

A) purchasing power risk
B) liquidity risk
C) timing risk
D) market risk

Purchasing Power Risk

The risk that the value of money will decrease over time, eroding the real value of investments and returns.

Conservative Investment

An investment strategy that prioritizes the preservation of capital and a steady flow of income, typically involving lower-risk securities such as bonds or high-quality stocks.

Inflation Pace

Refers to the speed at which the general level of prices for goods and services is rising over time.

  • Recognize the hazards involved with investments, specifically market volatility and the risk of diminishing buying power.
verifed

Verified Answer

??
???????? ??????Jun 09, 2024
Final Answer :
A
Explanation :
Purchasing power risk is the possibility that your money's value may decrease over time due to inflation if it isn't growing fast enough. This risk is particularly relevant for conservative investments that have lower potential returns but are less risky. Option B (liquidity risk) refers to the possibility of not being able to access your money when you need it, while option C (timing risk) refers to the possibility of poor timing when buying or selling assets. Option D (market risk) refers to the possibility of losses due to market fluctuations.