I selected market risk because I assumed the question was asking about Cambell’s portfolio. I understand that as a result of inflation, the fed raised rates and a recession ensued. The last part of the sentence is why I picked market risk because it mentioned his portfolio was down 46% in value. I usually associate inflation risk with investments that have stated rates or fixed income. A little clarification would be a appreciated! Thanks!
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Hi @Persistent_crimson_s, welcome, and thanks for posting!
This is a case of there being multiple good answers. The question states that the economy is going through a recession and the market has generally declined overall, which certainly fits with market risk.
However, it also says that this recession was specifically caused by the prices of goods and services increasing along with the Fed increasing interest rates. Both those points indicate that this is a case of inflation risk, which makes it a more accurate and more correct answer.
Basically, if there’s a specific choice and a general choice that both fit, it’s better to choose the specific one!
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