Question
With a 4-year investment horizon, holding a 5-year zero-coupon bond. What kind of risk is this investor exposed to? a. Liquidity risk; and she is
With a 4-year investment horizon, holding a 5-year zero-coupon bond. What kind of risk is this investor exposed to?
a. Liquidity risk; and she is concerned about potential interest rate decrease at the end of year 4
b. Reinvestment risk; and she is concerned about potential interest rate increase at the end of year 4
c. Both reinvestment risk and liquidity risk; and she is concerned about no interest rate change at the end of year 4
d. Liquidity risk; and she is concerned about potential interest rate increase at the end of year 4
e. Reinvestment risk; and she is concerned about potential interest rate decrease at the end of year 4
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
