Investors Who Attempt to Reduce Their Risk of Fluctuating Market

question 65

Multiple Choice

Investors who attempt to reduce their risk of fluctuating market interest rates by holding only short-term instruments

• A)will succeed as long as the short-term instruments are Treasury bills.
• B)will fail because short-term instruments are affected more by fluctuations in market interest rates than are long-term instruments.
• C)will expose themselves to reinvestment risk.
• D)will incur large capital gains.

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Definitions:

Multiple-Choice

A type of question or survey format that presents respondents with several answers and requires them to select the correct one.

Recognition

The cognitive process of identifying previously encountered information, such as objects, situations, or people, from among available options.

Parallel Processing

Processing many aspects of a stimulus or problem at once.

Automatic Processing

Unconscious encoding of incidental information, such as space, time, and frequency, and of well-learned information, such as word meanings.