Purchasing Power Risk 2

Definition of "Purchasing power risk"

Marcelle Smith
Marcelle Smith BHGRE Metro Brokers

Investment risk associated with the relationship between the yield (interest, dividends, and capital) of financial instruments and the rate of inflation in the economy. For fixed income financial instruments such as a fixed dollar annuity and fixed dollar life insurance, the financial security of the recipient is diminished in proportion to the rise of inflation.

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