If You Purchase a Bond That Matures in 5 Years

question 39

Multiple Choice

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

• A)credit risk.
• B)default risk.
• C)interest rate risk.
• D)liquidity risk.

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Definitions:

Obvious Terms

Conditions or elements in an agreement or contract that are clear and unmistakable to all parties involved, often not needing explicit statement or detailed explanation.

Quasi Contract

A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, quasi contracts are imposed to avoid the unjust enrichment of one party at the expense of another.

Imposed

Enforced or applied by authority or necessity, often referring to laws, taxes, or penalties that are set upon individuals or entities.

Fairness And Justice

Fairness And Justice involve principles of impartiality and equity where individuals receive fair treatment and decisions are made without favoritism or prejudice.