How does a change in expected inflation affect an endowment’s risk tolerance?
I thought that it didn’t since expected inflation just affects the return requirement but the guideline answers suggest that it should affect risk tolerance since it might increase return requirements and hence decrease or increase risk tolerance depending on how the endowment reacts.
In other readings, i thought it was quite clear that an increase in your return requirment should not increase your willingness to take risks since you might jeopardize your assets.
Anyone else find this answer weird?