Carter National Bank is worried because it knows that the municipal bonds it has in its bond portfolio can be difficult to sell quickly.What type of risk would this be an example of?
A)Default risk
B)Inflation risk
C)Liquidity risk
D)Call risk
E)Basis risk

Question

Quizplus · Accepted Answer

Liquidity risk refers to the risk of not being able to sell a security quickly enough at a fair price, which can be a concern for securities that are not actively traded or have a limited market. In this scenario, Carter National Bank is worried about the liquidity risk associated with its municipal bonds.

Carter National Bank Is Worried Because It Knows That the Municipal