Interest Rate Risk Is Composed Of

question 4

Multiple Choice

Interest rate risk is composed of:

• A) market risk and default risk.
• B) price risk and credit risk.
• C) price risk and reinvestment risk.
• D) default risk and liquidity risk.

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Definitions:

Capital Intensity Ratio

A measure of the amount of capital needed per dollar of revenue, indicating the investment required for a company to maintain its current level of production.

Full Capacity

The maximum level of output that a company can sustain over a period of time without increasing the production resources.

Long-term Debt

Borrowings or financial obligations that are due for repayment over a period longer than one year.

Capital Intensity Ratio

A financial measure that indicates the amount of assets or capital required to generate a dollar of revenue, illustrating the capital efficiency of a company.