INFLATION RISK Definition

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INFLATION RISK is the risk that total return on the investment is less than the rate of inflation. It is one of the major risks in fixed income securities. Also called Purchasing Power Risk.

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MODIFIED INTERNAL RATE OF RETURN is the rate of return which equates the initial investment with the terminal value, where the terminal value is the future value of the cash inflows compounded at the required rate of return (the opportunity cost of capital).

EARNED INCOME is that income realized by the provisioning of goods and services.

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