As You Allocate More of Your Investment Portfolio to Bonds,you

question 40

Multiple Choice

As you allocate more of your investment portfolio to bonds,you reduce your exposure to ________ risk,but increase your exposure to ________.

• A)interest rate; business risk
• B)business; default
• C)market; interest rate risk
• D)default; liquidity risk

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Definitions:

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined future date and price, often used for hedging or speculation purposes.

Highly Marketable Securities

Securities that can be easily sold or converted into cash quickly without a significant loss in value.

Treasury Bills

Short-term government securities with maturities of one year or less, sold at a discount from their face value.

Warehouse Receipts

Documents that provide proof of ownership of commodities that are stored in a warehouse for protection and future sale.