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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

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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: 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: YELDIN 15 B 6 Frank Bartowe is recring soon, to he's concerned about his investments providing him with a steady income every year. He's aware that if interest the potential earings power of the cash flow from his investments will increase. In particular, he is concerned that a dedine interest rates might lead to annual income from his investments. What kind of risk is Prank most concemed about protecting against? Interest rate risk Reinvestment risk 0 5 10 15 20 25 30 YEARS TO MATURITY Answer the folowing question based on your understanding of interest rate risk and reinvestment risk True or de Assuming all else is equal, short-term securities are exposed to higher reinvestment risk than long-term securities >>

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