The fact that a consumer who purchases a particular basket of goods for $100 today has to pay $105 next year for the same basket of goods is an example of which of the following risks?
A)Inflation risk
B)Default risk
C)Liquidity risk
D)Price risk
E)Maturity risk

Question

Quizplus · Accepted Answer

The increase in the price of goods is caused by inflation, which is a risk for consumers as it reduces the purchasing power of their money over time. Default risk relates to the risk of a borrower being unable to meet their debt obligations, liquidity risk relates to the ease of selling an asset, price risk refers to the risk of an asset's value changing, and maturity risk relates to changes in the value of a bond as it approaches maturity.

The Fact That a Consumer Who Purchases a Particular Basket