Asked by Sofia Avelar on Jul 05, 2024
Verified
Which type of risk is most significant for bonds?
A) maturity risk
B) default risk
C) interest rate risk
D) reinvestment rate risk
Interest Rate Risk
The potential for investment losses that result from a change in interest rates, affecting the value of fixed-income securities inversely to the direction of the rate change.
Default Risk
The risk that a borrower will not make the required payments on their debt obligations.
Maturity Risk
The risk associated with the changing value of securities due to the time remaining until their maturity date.
- Learn about bond risk types and their significance in investment decisions.
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Learning Objectives
- Learn about bond risk types and their significance in investment decisions.
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