The riskiness of an asset's return that results from interest rate changes is called
A) interest-rate risk.
B) coupon-rate risk.
C) reinvestment risk.
D) yield-to-maturity risk.

Question

Quizplus · Accepted Answer

Interest-rate risk refers to the variability in an asset's return due to changes in interest rates. When interest rates rise, the value of fixed-income securities (such as bonds) usually goes down, leading to a decrease in their returns. Therefore, interest-rate risk is a significant concern for investors who own fixed-income securities.

The Riskiness of an Asset's Return That Results from Interest