Which Bond Provision Would Be Considered the Most Risky for an Investor

question 12

Multiple Choice

Which bond provision would be considered the most risky for an investor who is concerned that market interest rates will drop dramatically over the life of the bond?

• A) sinking fund
• B) deferred call
• C) freely callable
• D) non-callable
• E) none of the above

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Definitions:

Working Memory

A mental mechanism with restricted capability, tasked with temporarily maintaining data for processing purposes.

Long-Term Storage

The phase of memory in which information is retained for extended periods, potentially for a lifetime.

Recency Effect

In free recall, the tendency to recall items at the end of the list more readily than those in the middle.

Memory Consolidation

The biological process through which memories are transformed from a transient and fragile status to a more permanent and robust state; according to most researchers, consolidation occurs over the course of several hours.