CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

An investor expects future inflation to decrease. Unlike previous predictions, this time he is quite sure about his inflation expectation. For such an investor the break-even inflation rate ______.
A. is uncertain
B. is expected to fall
C. is expected to rise
Explanation: The break-even inflation rate incorporates both the inflation expectations and the risk premium for the uncertainty of the future inflation environment. In this example both elements fall, causing the break-even inflation rate to fall.

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