Patrick Jones is interested in purchasing a 65" LED TV for his living room.He knows that right now the TV will cost approximately $500.Patrick wants to borrow the money to purchase the TV but is concerned that interest rates are going to fall in the future.He is worried that he might get stuck with a loan at a high interest rate.What type of risk is Patrick worried about?
A)Inflation risk
B)Interest rate risk
C)Income risk
D)Personal risk
E)Liquidity risk

Question

Quizplus · Accepted Answer

Patrick is concerned about interest rate risk, which is the risk that arises for bond owners from fluctuating interest rates. If he borrows money now and the interest rates fall in the future, he will end up paying more in interest than if he had waited.

Patrick Jones Is Interested in Purchasing a 65" LED TV