A security with higher risk will have a higher expected return. A bond's risk level is reflected in its yield, but understanding the different risks involved when Investing in bonds is important The curves on the following graph show the prices of two 10% annual coupon bonds at various interest rates od 200 1000 Blond BOND VALUE 100 to-Band 2 INTEREST RATE Chapter 6 Assignment 16 12 INTEREST RATE (%) Based on the graph, which of the following statements is true? The 1-year band has more interest rate price risk O The 10-year bond has more interest rate price risk O Both bonds have equal interest rate price risk Neither bond has any interest rate price risk Raphael is concerned that a decline in interest rates might lead to annual income from his investments. If interest rates the value of earnings from his investments will increase. If his goal is to save for retirement, which of the following bonds poses the biggest risk? O A 20 year, 0% coupon bond O A 20-year, 10% coupon bond O A 30-year, 10% coupon bond O A 20-year, 10% coupon bond that may be called in 10 years Grade It Now Save & Continue