Price risk is the risk that Select one: a. the bond principal will not be paid in full or on time. b. market prices increase due to market interest rate changes making bonds more expensive to purchase. c. the bonds in a dedicated portfolio will decrease in value in response to an increase in interest rates. d. the yield-to-maturity will be less than the inflation risk causing the real rate of return to be negative. e. coupon payments will be reinvested at a rate that is less than the bond's yield-to-maturity
Price risk is the risk that Select one: a. the bond principal will not be paid in full or on time. b. market prices increase due to market interest rate changes making bonds more expensive to purchase. c. the bonds in a dedicated portfolio will decrease in value in response to an increase in interest rates. d. the yield-to-maturity will be less than the inflation risk causing the real rate of return to be negative. e. coupon payments will be reinvested at a rate that is less than the bond's yield-to-maturity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Price risk is the risk that
Select one:
a.
the bond principal will not be paid in full or on time.
b. market prices increase due to market interest rate changes making bonds more expensive to purchase.
c. the bonds in a dedicated portfolio will decrease in value in response to an increase in interest rates.
d. the yield-to-maturity will be less than the inflation risk causing the real rate of return to be negative.
e. coupon payments will be reinvested at a rate that is less than the bond's yield-to-maturity
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