Which of the Following Types of Risk Affect Bonds

question 28

Multiple Choice

Which of the following types of risk affect bonds?
I. call risk
II. business risk
III. purchasing power risk
IV. liquidity risk

• A) III and IV only
• B) II, III and IV only
• C) I, III and IV only
• D) I, II, III and IV

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Definitions:

Economic Inefficiency

Situations where resources are not optimally allocated, resulting in lost potential output or welfare.

Price Wars

A competitive exchange among rival companies where each company lowers the price of its products in an attempt to undercut the competition, potentially harming profit margins.

Mutual Interdependence

in economics refers to situations in which the actions of one firm or country can significantly impact the outcomes of other firms or countries, often seen in oligopolistic markets.

Limit Pricing

Limit pricing is a strategy where prices are set lower than the short-term market equilibrium by a dominant player to deter new entrants into the market.