Interest rate risk is greater for stocks than for bonds.

Question

Quizplus · Accepted Answer

Interest rate risk typically affects bond prices more than stocks. This is because bond prices have an inverse relationship with interest rates - when interest rates rise, bond prices generally fall. Stocks, on the other hand, are influenced by a variety of factors including company performance, economic indicators, and investor sentiment. While changes in interest rates may have some impact on stock prices, the effects are typically not as significant as with bonds. Therefore, interest rate risk is generally considered to be greater for bonds than for stocks.

Interest Rate Risk Is Greater for Stocks Than for Bonds