The possibility that the Fed may raise the discount rate is an example of

Question

Quizplus · Accepted Answer

The possibility of the Fed raising the discount rate is an example of interest rate risk, which refers to the potential impact on an investment or portfolio from changes in interest rates. When interest rates rise, the value of fixed-income assets tends to decline, which can lead to losses for investors. Therefore, investors must manage interest rate risk by diversifying their investments, using hedging strategies, or adjusting their portfolios to address changes in interest rates.

The Possibility That the Fed May Raise the Discount Rate