All bonds face interest-rate risk but only some face default risk.

Question

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All bonds face interest-rate risk because changes in interest rates can affect their market value. However, only some bonds face default risk, which is the risk that the issuer may not be able to make the promised interest payments or return the principal to the bondholders. Bonds issued by companies or governments with a lower credit rating are more likely to face default risk.

All Bonds Face Interest-Rate Risk but Only Some Face Default