Sophia-Principle-Finance-Milestone (133)

SCORE () %=°_ UNIT 2 — MILESTONE 2 20/20 7 1YypeES Ul DUINUS Report an issue with this question ) 1 @ Select the true statement about reinvestment risk. 0O Callable bonds are less exposed to reinvestment risk. o o Reinvestment risk is inversely related to interest rate risk. A smart investor can eliminate reinvestment risk in O addition to interest rate risk. 0O It is the risk that a bond's price will fall below its par value. RATIONALE If there is low interest rate risk, then there must be reinvestment risk; the investor cannot minimize both.