Price risk of a bond occurs when a bond must be sold prior to maturity at an uncertain price because the:
A) Yield is determined by the Federal Reserve.
B) Future return or yield is unknown.
C) Future yield is expected to be less than the coupon rate.
D) b and c only.
E) None of the above.

Question

Quizplus · Accepted Answer

Price risk of a bond arises because the future return or yield is unknown, which affects the bond's price if it needs to be sold before maturity.

Price Risk of a Bond Occurs When a Bond Must