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An investor holding fixed-rate bonds during a period of rising inflation is MOST concerned about:
a.Liquidity risk
b.Purchasing-power (inflation) risk
c.Legislative risk
d.Business risk
Giải thích
Purchasing-power or inflation risk is the danger that rising prices will erode the real value of a bond's fixed interest and principal payments. Liquidity, legislative, and business risks describe unrelated concerns about selling, law changes, and company operations.
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Câu hỏi liên quan cùng chủ đề
- Credit (default) risk refers to the possibility that:
- An investor holds long-term bonds and worries that rising market interest rates will reduce their price. This concern describes:
- When interest rates fall, an investor who owns a callable bond faces the risk that the bond will be called and the proceeds must be reinvested at lower rates. This combined concern is BEST described as:
- An investor wants to sell a thinly traded municipal bond quickly but can only do so by accepting a much lower price. This difficulty illustrates:
- Which type of risk can an investor most effectively reduce through diversification across many different securities?
- Market (systematic) risk is best described as the risk that:
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