The risk cause by changes in inflation that affect revenues, expenses and profitability is called:
A) interest rate risk
B) business risk
C) purchasing power risk
D) financial risk
E) none of the above

Question

The risk cause by changes in inflation that affect revenues, expenses and profitability is called:
A)	interest rate risk
B)	business risk 
C)	purchasing power risk
D) 	financial risk
E) 	none of the above

Quizplus · Accepted Answer

Purchasing power risk is the risk of changes in inflation that can affect the purchasing power of an organization's revenues, expenses, and profitability. This risk arises as inflation can erode the purchasing power of money over time, resulting in decreased profitability and higher costs of goods sold. Interest rate risk is the risk caused by changes in interest rates, while business risk and financial risk are broader categories of risk that encompass various forms of risk that can impact a company's operations and financial performance. Therefore, the best choice is C (purchasing power risk).

The Risk Cause by Changes in Inflation That Affect Revenues