nosBme-Bonds valuation 12. Risks of Investing in bonds A security with higher risk will have a higher expected return. A bond's risk level ls reflected in its yield, but understanding the different risks involved when investing in bonds is important. The arves on the following graph show the prices of two 10% annual coupon bonds at various interest rates. BOND VALUE IS 2030 1750 500 250 tes 1-Year Bond 1000 750 500 10-Year Bond 250 12 20 4 INTEREST RATE Based on the graph, which of the following statements is true? The 1-year bond has more interest rate risk Based on the graph, which of the following statements is true? O The 1-year bond has more interest rate risk. O The 10-year bond has more interest rate risk O Both bonds have equal interest rate risk tes O Neither bond has any interest rate risk Frank Barlowe is retiring soon, so he's concerned about his investments providing him with a steady income every year. He's 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 decine n annual income from his investments, what kind of risk is Frank most concerned about protecting against, t lead to Reinvestment rate risk Interest rate risk Grade It Now Save & Continue Continue without saving