Explain how inflation would affect portfolio risk

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It is widely believed that changes in certain macroeconomic variables may directly affect performance of an equity portfolio.

As the chief investment officer of a hedge fund employing a global macro-oriented investment strategy, you often consider how various macroeconomic events might impact your security selection decisions and portfolio performance.

Briefly explain how each of the following economic factors would affect portfolio risk and return: (a) Industrial production, (b) Inflation, (c) Risk premia, (d) Term structure, (e) Aggregate consumption, (f) Oil prices.

Reference no: EM132043400

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