Interest rate risk and liquidity risk are usually inversely related.

Question

Quizplus · Accepted Answer

Interest rate risk and liquidity risk are not usually inversely related; they are distinct types of financial risks. Interest rate risk is the risk of losing money due to a change in interest rates, which can affect the value of investments. Liquidity risk refers to the difficulty of quickly converting an asset into cash without significant loss in value. These risks can sometimes correlate, but they do not inherently move in opposite directions.

Interest Rate Risk and Liquidity Risk Are Usually Inversely Related