Which of the following types of risk has the most effect on owners of fixed-income securities?
A) Business risk
B) Event risk
C) Market risk
D) Interest rate risk
E) Purchasing power risk

Question

Quizplus · Accepted Answer

Owners of fixed-income securities are extremely affected by changes in interest rates. Interest rate risk refers to the possibility that changes in interest rates will affect the value of a fixed-income security. As the interest rates go up, the value of fixed-income securities decreases, and vice versa. This effect is the most significant risk factor that fixed-income security owners face.

Which of the Following Types of Risk Has the Most