Which of the following types of risk affect bonds?
I. call risk
II. business risk
III. purchasing power risk
IV. liquidity risk
A) III and IV only
B) II, III and IV only
C) I, III and IV only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

Bonds are affected by various types of risk: call risk (the risk that a bond will be called or redeemed before its maturity date), business risk (the risk associated with the issuer's business and its ability to pay back the bond), purchasing power risk (the risk that inflation will erode the purchasing power of the bond's future payments), and liquidity risk (the risk that the bond cannot be sold quickly enough in the market to prevent a loss).

Which of the Following Types of Risk Affect Bonds