Which of the Following Sources of Return Is Most Likely

question 18

Multiple Choice

Which of the following sources of return is most likely exposed to interest rate risk for an investor of a fixed-rate bond who holds the bond until maturity?

• A) Capital gain or loss
• B) redemption of principal
• C) reinvestment of coupon payments

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Definitions:

Statute

A law enacted by a legislative body in a governmental context.

Sublet

The lease of leased premises by a tenant-in-chief to another tenant for a shorter term than the original tenancy.

Distress

An emotional state of extreme discomfort, sadness, or pain, or a legal term referring to the seizure of property to compel payment or compliance.

Distrain

The act of seizing someone's property in order to compel payment of rent or to enforce a legal judgment.