SIE practice questionhardInflation/purchasing power risk
A retiree depends on fixed pension payments for living expenses. Which risk could most significantly impact their standard of living if inflation accelerates?
- ALiquidity risk
- BCredit risk
- CInflation/purchasing power risk✓ Correct answer
- DCall risk
Explanation
Why C — Inflation/purchasing power risk
Fixed income is eroded by rising prices, reducing purchasing power. The other risks are not directly related to maintaining living standards under inflation.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Economic Indicators questions
- An investor holds a long-term Treasury bond that pays a fixed coupon. If inflation rises significantly, which risk does…
- An investor’s fixed annuity pays the same monthly amount for 20 years. Which risk is most prominent?
- An inverted yield curve typically signals:
- Which portfolio is most vulnerable to inflation risk?