BOND VALUE ($) 2000 1750 1500 1250 1000 750 500 250 0 12 INTEREST RATE (%) 1-Year Bond O Interest rate price risk 10-Year Bond Based on the graph, which of the following statements is true? Both bonds have equal interest rate price risk. The 10-year bond has more interest rate price risk. The 1-year bond has more interest rate price risk. Neither bond has any interest rate price risk. Interest rate reinvestment risk 16 Brian Cohen is retiring soon, so he is concerned about his investments providing him steady income every year. He is aware that if interest rates , the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in interest rates might lead to annual income from his investments. What kind of risk is Brian most concerned about protecting against? ?
BOND VALUE ($) 2000 1750 1500 1250 1000 750 500 250 0 12 INTEREST RATE (%) 1-Year Bond O Interest rate price risk 10-Year Bond Based on the graph, which of the following statements is true? Both bonds have equal interest rate price risk. The 10-year bond has more interest rate price risk. The 1-year bond has more interest rate price risk. Neither bond has any interest rate price risk. Interest rate reinvestment risk 16 Brian Cohen is retiring soon, so he is concerned about his investments providing him steady income every year. He is aware that if interest rates , the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in interest rates might lead to annual income from his investments. What kind of risk is Brian most concerned about protecting against? ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:BOND VALUE ($)
2000
1750
1500
1250
1000
750
500
250
0
12
INTEREST RATE (%)
1-Year Bond
10-Year Bond
16
Based on the graph, which of the following statements is true?
Interest rate price risk
O Interest rate reinvestment risk
Both bonds have equal interest rate price risk.
The 10-year bond has more interest rate price risk.
The 1-year bond has more interest rate price risk.
Neither bond has any interest rate price risk.
Q
Brian Cohen is retiring soon, so he is concerned about his investments providing him steady income every year. He is aware that if interest rates
, the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in
interest rates might lead to annual income from his investments. What kind of risk is Brian most concerned about protecting against?
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