Systematic Risk
An investor concerned about a sustained increase in the Consumer Price Index (CPI) is most worried about:
CPI measures inflation. Rising CPI = purchasing power risk. Affects fixed-income most.
Complete Analysis & Legal Rationale
The CPI measures inflation. Rising CPI indicates declining purchasing power of future cash flows. This purchasing power risk (inflation risk) is a systematic risk affecting all investments, particularly fixed-income securities.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Business risk is company-specific, not related to CPI.
Matches the verified teaching point in the explanation.
Liquidity risk involves ability to sell investments quickly.
Credit risk involves an issuer's ability to pay obligations.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.