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Which of the Following Is True Regarding Flexibility

question 31

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Which of the following is true regarding flexibility?


Definitions:

Default Risk

Default risk is the chance that a borrower will be unable to make the required payments on their debt obligations.

Interest Rate Risk

The risk of loss to an investor from changes in the price of a bond that arise from changes in the market interest rate. Also called price risk and maturity risk.

Maturity Risk

Maturity risk pertains to the uncertainty and potential loss associated with holding a bond or other fixed-income investment until its maturity date.

Coupon

The percentage rate of interest a bond yields annually, based on its principal amount.

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