Question

____________ risk refers to the danger of changes in buying power during times of rising or falling prices.

Answer 1

The risk refers to the danger of changes in buying power during times of rising or falling prices is known as inflation.

What is a risk?

Risk refers to the uncertainty or probability of an accidental event that will affect the decision-making of an individual or organization. In business the higher the risk, the higher the profit is achieved.

Inflation is defined as the ratio at which prices rise over time. Inflation is usually defined as a wide measure of price increases or increases in the cost of living in a place affecting its citizens.

Inflation diminishes the purchasing power of individuals which leads to high risk for investors who paid a fixed rate of interest on the investment. Most concerned about inflation-reducing returns are those individuals who invested in cash equivalents.

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