The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities $($USTs$),$ AA$-$rated

corporate bonds, and BBB$-$rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding security

class:

A

B

C

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 Frank most concerned about protecting against?

Interest rate risk

Reinvestment risk

Answer the following question based on your understanding of interest rate risk and reinvestment risk.

True or False: Assuming all else is equal, short$-$term securities are exposed to higher reinvestment risk than long$-$term securities$.$

True

False