SIE practice questioneasyInterest rate risk
Which risk is most likely to negatively impact the value of a long-term bond if interest rates rise?
- ALiquidity risk
- BBusiness risk
- CInterest rate risk✓ Correct answer
- DCurrency risk
Explanation
Why C — Interest rate risk
Interest rate risk is the risk that changes in interest rates will reduce the value of fixed-income securities. Liquidity risk concerns the ability to sell, business risk is about company operations, and currency risk impacts foreign investments.
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