1. Which of the following statements about risks associated with bond investing is incorrect?

a. Market price risk is the risk faced by investors that bond prices fluctuate when interest rates fluctuate.

b. Reinvestment risk is the risk that the interest rate at which coupons can be reinvested will fall.

c. Credit risk is the risk that an issuer will fail to make full and timely payments of coupons and/or principal.

d. Market price risk and reinvestment risk have offsetting effects.

e. Bond A and B are identical to each other except that Bond A has a put option attached to it and Bond B does not. So Bond A has a lower convexity.