SIE practice questionhardPolitical/legislative risk
A foreign government unexpectedly nationalizes its banks, causing local bond prices to fall. U.S. investors in those bonds face what type of risk?
- AMarket risk
- BPolitical/legislative risk✓ Correct answer
- CCurrency risk
- DInterest rate risk
Explanation
Why B — Political/legislative risk
Nationalization is a government action affecting securities—political/legislative risk. The fall in price is not due to market, currency, or interest rate changes directly.
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