Interest rate risk is composed of:
A)market risk and default risk.
B)price risk and credit risk.
C)price risk and reinvestment risk.
D)default risk and money risk.

Question

Quizplus · Accepted Answer

Interest rate risk is composed of price risk (the risk that an investment will lose value due to changes in interest rates) and reinvestment risk (the risk that future cash flows will have to be reinvested at lower interest rates). The other options listed (market risk, default risk, credit risk, and money risk) are all related to different types of risks that investors may face, but are not directly related to interest rate risk.

Interest Rate Risk Is Composed Of