Interest rate risk results from possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.

Question

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Interest rate risk is real and results from the fact that fixed-rate debt instruments, such as bonds, can experience price fluctuations when market interest rates change. As interest rates rise, the market value of fixed-rate debt securities declines, while falling interest rates cause the market value of fixed-rate debt securities to increase.

Interest Rate Risk Results from Possible Price Fluctuations in Fixed-Rate