Products & Their RisksQuestion 146 of 398

Legislative (regulatory) risk refers to the possibility that:

a.A company's CEO resigns unexpectedly

b.Interest rates rise and bond prices fall

c.A change in law or regulation, such as tax rules, reduces an investment's value

d.A foreign currency weakens against the dollar

Explanation

Legislative risk is the chance that new laws or regulatory changes will adversely affect an investment. For example, a change to the tax treatment of municipal bond interest could reduce demand and prices. It is distinct from interest rate risk, management risk, and currency risk.

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Legislative (regulatory) risk refers to the possibility that:

Explanation

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