The greatest risk inherent in highly rated bonds is
A) the difficulty of selling them before their maturity date.
B) a potential reduction in the expected interest rate.
C) potential failure of the issue to repay the principal.
D) loss of purchasing power due to inflation.

Question

Quizplus · Accepted Answer

The greatest risk inherent in highly rated bonds, which are considered low risk in terms of default, is the loss of purchasing power due to inflation. This is because the fixed interest payments and principal repayment do not adjust for inflation over time.

The Greatest Risk Inherent in Highly Rated Bonds Is