Which type of risk is associated with changes in market prices?

Market risk is the correct answer because it specifically refers to the potential for losses due to fluctuations in the prices of securities and other market instruments. This type of risk arises from a variety of factors that can affect the overall market, including economic changes, political events, and changes in investor sentiment.

When market prices change, the value of investments can rise or fall, which directly impacts investors and their portfolios. Market risk is often considered in the context of systematic risk, which cannot be eliminated through diversification, as it affects all assets in the market.

In comparison, inflation risk pertains to the erosion of purchasing power due to rising prices over time, impacting fixed-income investments primarily. Interest rate risk deals with changes in interest rates that can affect the value of fixed-income investments. Credit risk is related to the possibility of a borrower defaulting on a loan or bond obligation. Each of these risks is important in the investment landscape but does not specifically address the variations in market prices directly as market risk does.