________ is the risk you take when you lock into a fixed-rate investment for a specific length of time.
A)Default risk
B)Interest rate risk
C)Market risk
D)Liquidity risk

Question

Quizplus · Accepted Answer

Interest rate risk refers to the possibility of losing out on potentially higher returns if interest rates were to rise during the fixed term of the investment. The longer the term, the greater the risk. With a fixed-rate investment, you are locked in for a set period of time, so if interest rates go up, you may miss out on better returns that you could have earned with a variable rate investment. However, if interest rates were to drop during the fixed term, you would benefit from the higher fixed rate. Therefore, the answer is B) Interest rate risk.

________ Is the Risk You Take When You Lock into a Fixed-Rate