Which of the following types of risk affect owners of fixed income securities more than owners of equity securities?

Question

Quizplus · Accepted Answer

Owners of fixed income securities, such as bonds, are more susceptible to interest rate risk than owners of equity securities. Fixed income securities have a set interest rate and cash flow, making them sensitive to changes in interest rates. If interest rates rise, the value of fixed income securities will decrease, as investors can pursue higher yields elsewhere. Equity securities, on the other hand, represent ownership in a company and are more affected by business and market risk.

Which of the Following Types of Risk Affect Owners of Fixed