Which of the Following Terms Means the Chance That Future

question 65

Multiple Choice

Which of the following terms means the chance that future interest payments will have to be reinvested at a lower interest rate?

• A) Credit quality risk
• B) Interest rate risk
• C) Liquidity rate risk
• D) Reinvestment rate risk

---

Definitions:

Increased Demand

Describes a situation where a larger number of consumers are willing and able to purchase a good or service at a given price, often leading to higher prices or a market shortage if supply does not increase correspondingly.

Price Ceiling

A legally established maximum price that can be charged for a good or service, preventing prices from reaching equilibrium levels.

Surplus

A situation where the quantity of a product supplied exceeds the quantity demanded, often resulting in a decrease in prices.

Shortage

A shortage occurs when the demand for a product exceeds the supply of that product at a specific price.