Series 6 - Investment Company And Variable Contracts Products Representative Exam

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Which of the following are most affected by inflation risk?

Stock mutual funds
A
Blue-chip stocks
B
Fixed annuities
C
Hedge funds
D

Explanations

Inflation risk is associated with fixed-return securities such as bonds, fixed annuities or preferred stocks. This is because a fixed rate of return is worth less over time as inflation goes higher. A fixed 10% bond yield, for example, is worth less, if inflation goes up 2% next year.

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