Interest rate risk is composed of:
A) market risk and default risk.
B) price risk and credit risk.
C) price risk and reinvestment risk.
D) default risk and liquidity risk.

Question

Quizplus · Accepted Answer

Interest rate risk is primarily composed of price risk, which is the risk of a change in the price of a bond due to interest rate changes, and reinvestment risk, which is the risk that cash flows from an investment will be reinvested at a lower interest rate.

Interest Rate Risk Is Composed Of