If You Purchase a Bond That Matures in 5 Years

question 81

Multiple Choice

If you purchase a bond that matures in 5 years but you may have to cash it in before that time, you are exposed to

• A) liquidity risk.
• B) default risk.
• C) interest rate risk.
• D) A and C are both correct.

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Definitions:

Test-Retest Reliability

A measure of the consistency of a psychological test or assessment when the same instrument is administered to the same group of people on two different occasions.

Test-Retest Reliability

The consistency of a measure assessed by administering the same test to the same group of individuals at two different points in time.

Face Validity

A measure of how suitable, relevant, or meaningful a test or procedure appears on the surface, even if not necessarily proven through empirical means.

Classification

The process of organizing or categorizing objects or concepts based on shared qualities or characteristics, often used in sciences to group information systematically.