The degree of price risk faced by bond investors increases in proportion to the period for which they hold the bonds.

Question

Quizplus · Accepted Answer

The degree of price risk faced by bond investors primarily increases with the bond's duration or maturity, not necessarily the period for which they hold the bonds. Longer-term bonds are more sensitive to interest rate changes, affecting their prices more significantly than shorter-term bonds.

The Degree of Price Risk Faced by Bond Investors Increases