10. Risks of investing in bonds The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: U.S. Treasury securities, AA rated corporate bonds, and BBB-rated corporate bonds. 2 15 A 10 20 YEARS TO MATURITY Use the dropdown menus to identify the group of securities that correspond to each yield curve. Curve A Curve B Curve Jake Stewart is retiring soon, so he is concerned about his investments providing him steady income every year. He is aware that if interest rates the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in Interest rates might lead to annual income from his investments. What kind of risk is Jake most concerned about protecting against? Interest rate reinvestment risk Interest rate price risk