Interest Rate Risk Is the Chance That the Value of an Investment

question 143

True/False

Interest rate risk is the chance that the value of an investment will decline because of market factors (such as economic, political, and social events) that are independent of the investment.

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Definitions:

Wilshire 5000 Index

A market-capitalization-weighted index of the market value of all US-based stocks actively traded in the United States.

Mutual Fund

An investment vehicle comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.

S&P 500 Index

A stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.

ETFs

Exchange-Traded Funds, investment funds traded on stock exchanges, much like stocks, typically tracking an index, commodity, bonds, or a mix of investment types.