MANAGEMENT

Detailed explanation-1: -Inflationary risk is the risk that inflation will undermine an investment’s returns through a decline in purchasing power. Bond payments are most at inflationary risk because their payouts are generally based on fixed interest rates, meaning an increase in inflation diminishes their purchasing power.

Detailed explanation-2: -Inflation risk, also referred to as purchasing power risk, is the risk that inflation will undermine the real value of cash flows made from an investment. Inflation risk can be seen clearly with fixed-income investments.

Detailed explanation-3: -The cause of inflation is the supply of money, the debt of the nation, demand-pull effect, cost-push effect, and exchange rate. All of these are related to uncertainty that is caused due to inflation are a pure risk and speculative risk.

Detailed explanation-4: -Rising costs and uncertain revenue growth can take a toll on corporate profit margins, and stock prices can fall in response. On a broader scale, high inflation creates unknowns about future interest rates, and that uncertainty often contributes to market volatility.