When a bondholder loses money because interest rates in the economy increase,it is an example of ____________ risk.
A)market
B)interest rate
C)inflation
D)business failure
E)current

Question

Quizplus · Accepted Answer

When interest rates in the economy increase, the value of existing bonds decreases because newly issued bonds with higher interest rates become more attractive to investors. This is known as interest rate risk.

When a Bondholder Loses Money Because Interest Rates in the Economy