If You Wish to Maintain a Constant Purchasing Power When

question 108

Multiple Choice

If you wish to maintain a constant purchasing power when you retire, you should choose retirement income options that are:

• A)deflated.
• B)nominal.
• C)indexed.
• D)inflateD.Indexing keeps wages and prices increasing at the same rate as inflation.

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Definitions:

Asset Price

The value at which an asset is bought or sold on the market.

Exercise Price

The cost at which an option holder has the right to buy or sell the base security.

Risk-Free Interest Rate

The hypothetical yield from an investment assumed to be free of any financial risk, often reflected through government bond yields.

Time To Expiration

The remaining period until the expiration date of a financial instrument, typically an option or futures contract.