SIE Exam Question 369: Answer and Explanation

Question: 369

Investors that purchase high quality fixed income investments for retirement income are most concerned with

• A. economic risk.
• B. inflation risk.
• C. principal risk.
• D. credit risk.

Correct Answer: B

Explanation:

B - Inflation risk is a major concern for investors who hold portfolios of fixed income investments for funding retirement income. As inflation increases, the purchasing power of their fixed coupon will fall.