Ability to take risk with inflation ( IPS of institutional investors)

CFA Level III
#1

1.I was trying to understand if inflation increases the ability to take risk or not.
Basically in some problems, I noted that when pension payments were adjusted to inflation, the ability to take risk decreased. But what I don’t get here is if pension payments are adjusted with inflation, how does it impact ones ability to take more risk?

  1. For foundation, the return calculation equales= real required return+ management fees and inflation. However, I believe that in this case, the ability to take risk increased because higher inflation, higher return requirement which means the higher ability to take risk?
#2

A higher required return doesn’t imply a higher ability to take risk. A higher need to take risk, perhaps, but not a higher ability.

Is your ability to take a punch higher when Mike Tyson’s swinging than when your 5-year-old niece is swinging?

#3

no, not really