The possibility that a change in general interest rates may lower the value of a bond or other fixed-rate investment is known as interest rate risk.
Bond prices decrease as interest rates rise and vice versa. In order to balance the more enticing rates of new bond offerings, the market price of old bonds declines. Which of the following statements is accurate regarding the bond interest rate risk? Interest rate fluctuations have an opposite reaction in bond prices. The possibility of an unfavorable shift in market interest rates poses a risk to profits and capital. Interest rate risk can also be impacted by maturity. The danger that altering interest rates before the bond matures might have an influence on its value increases with the bond's maturity length, which.
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