Bonds are risky because of: a. Default risk: the risk that the issuer may fail to pay.

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Bonds are risky because of:

a. Default risk: the risk that the issuer may fail to pay.

b. Inflation risk: the risk that the inflation rate may be more or less than expected, affecting the real value of the promised nominal payments.

c. Interest rate risk: the risk that the interest rate may change, causing the bond’s price to change.

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Related Book For  book-img-for-question

Money Banking And Financial Markets

ISBN: 9781260226782

6th Edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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