9. Risks of investing in bonds

The higher the risk of a security, the higher its expected return will be. A bonds 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 (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the dropdown menus to label each security's profile correctly YIELD [%] 0 5 10 15 20 25 30 YEARS TO MATURITY Which type of bonds offer a higher yield? O Callable bonds Nanallahla hande