The risk that the value of long-term assets in my portfolio will fall when interest rates rise is which of the following?
A)liquidity risk
B)default risk
C)exchange rate risk
D)interest rate risk

Question

Quizplus · Accepted Answer

Interest rate risk refers to the risk that the value of an asset will decrease due to rising interest rates. This is particularly true for long-term assets, such as bonds, where the price is inversely related to interest rates. As interest rates rise, the present value of future cash flows decreases, leading to a decrease in asset value. Therefore, the risk that the value of long-term assets in the portfolio will fall when interest rates rise is known as interest rate risk.

The Risk That the Value of Long-Term Assets in My