Price Risk and Reinvestment Risk

question 52

Multiple Choice

Price risk and reinvestment risk

• A) offset one another to a certain extent as interest rates change.
• B) are two bond risks related to credit risk.
• C) work together to magnify the price impact of a change in interest rate.
• D) both have an effect on bond price.

---

Definitions:

Risky Shift

A phenomenon where group decisions tend to be riskier than the average of the individual choices initially proposed by the group members.

Conservative Shift

A psychological theory indicating that groups tend to make decisions that are more risk-averse or conservative than individual members would make alone.

Group Decision Making

The process by which a group of individuals collaboratively makes a choice from the alternatives.

Company Data

Information related to the business operations, financials, and performance metrics of a company.