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Zorluk: OrtaSystematic and Market Risks

An investor planning for a multi-decade retirement horizon reallocates their portfolio entirely into short-term U.S. Treasury bills to avoid market volatility. Which systematic risk primarily impacts this investor's portfolio over the long term?

  1. Inflation risk, because fixed low-yielding cash equivalents may fail to preserve real purchasing power over extended periods.Cevap
  2. B
    Credit risk, because U.S. Treasury bills carry significant risk of issuer default during prolonged macroeconomic downturns.
  3. C
    Market risk, because moving into cash equivalents eliminates all forms of systematic risk from a portfolio.
  4. D
    Interest rate risk, because declining market interest rates will cause the market price of existing short-term Treasury bills to fall.

Cevap

Inflation risk, because fixed low-yielding cash equivalents may fail to preserve real purchasing power over extended periods.
Purchasing power (inflation) risk is a major systematic risk for conservative portfolios. Over a long investment horizon, fixed yields on cash equivalents like short-term Treasury bills may fail to outpace inflation, diminishing the investor's purchasing power over time.

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1
Identify the asset allocation and portfolio strategy
The portfolio is placed 100% in short-term U.S. Treasury bills and cash equivalents to avoid stock market volatility.
Understanding the holdings helps determine which risk factors apply and which are minimized.
2
Evaluate the risks associated with short-term U.S. Treasury securities
Short-term Treasury bills have negligible default (credit) risk and very low interest rate risk due to their short maturity.
This rules out credit risk and high interest rate risk as primary long-term threats.
3
Analyze the long-term systematic risk impact
Over a multi-decade horizon, low cash yields often fail to keep pace with rising consumer prices, eroding real purchasing power.
Purchasing power (inflation) risk is a key systematic risk inherent in conservative, fixed-rate cash holdings over long time periods.

Anahtar Kavram

Purchasing power (inflation) risk is a non-diversifiable systematic risk that erodes the real value of fixed returns and cash holdings over long time horizons.
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Systematic and Market Risks

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