Question

In: Finance

Which of the following is the name for the risk of changes in the price or...

Which of the following is the name for the risk of changes in the price or value of fixed-rate debt instruments resulting from changes in market interest rates?

  1. Default risk

  2. Liquidity risk

  3. Inflation risk

  4. Interest rate risk

Solutions

Expert Solution

Interest rate risk

Explanation :- interest rate risk is the risk which is caused due to change in interest rates. It depends on how sensitive is the price to interest rate change in the market.


Related Solutions

A) The price of which of the following will be more sensitive to changes in interest...
A) The price of which of the following will be more sensitive to changes in interest rates. Explain your answer. Proper explanation / calculations required Bond  X. 2-year 15% coupon bond with a face value of $1000 that pays semi-annual coupons and is trading at a yield of 26% Or Bond Y. A Zero-Coupon Bond that has a maturity of 18 months B)  What is the price of the Bond X . above ? C) Would your answer to part A change...
Which of the following changes decreases the demand for money? Increase in the risk of stock...
Which of the following changes decreases the demand for money? Increase in the risk of stock market Increase in the risk of bond market Increase in the liquidity of stocks Increase in the liquidity of bonds None of the above
1a. Which of the following does the sensitivity of the bond price to the changes in...
1a. Which of the following does the sensitivity of the bond price to the changes in interest rates depend on? Maturity of the bond Coupon rate Both maturity of the bond and the coupon rate None `1b. Which of the following is correct when the Coupon Rate of a bond is equal to its Yield to Maturity? The price of this bond is equal to its face value. The price of this bond is higher than its face value. The...
Which of the following does the sensitivity of the bond price to the changes in interest...
Which of the following does the sensitivity of the bond price to the changes in interest rates depend on? Maturity of the bond Coupon rate Both maturity of the bond and the coupon rate None Which of the following is correct when the Coupon Rate of a bond is equal to its Yield to Maturity? The price of this bond is equal to its face value. The price of this bond is higher than its face value. The price of...
Explain how changes in YTM affects the bond’s market price risk and reinvestment risk
Explain how changes in YTM affects the bond’s market price risk and reinvestment risk
Question 5: Which of the following contracts has the most price risk? The most reinvestment risk?...
Question 5: Which of the following contracts has the most price risk? The most reinvestment risk? 7-year bond with a 5% coupon 1-year bond with a 12% coupon 3-year bond with a 5% coupon 15-year zero coupon bond 15-year bond with a 10% coupon
How should marketers respond to price changes? Name and describe the four forms of segmented pricing,...
How should marketers respond to price changes? Name and describe the four forms of segmented pricing, give respective examples and explain the conditions to apply segmented pricing strategy.
Given the price elasticities and price changes for the following products A–E in the table below,...
Given the price elasticities and price changes for the following products A–E in the table below, show how much the quantity will change (indicating an increase or decrease) and what effect this will have on total revenue (indicating an increase or decrease). Round your answers to 1 decimal place. Product Price elasticity % ∆ Price %∆ Quantity ∆ Total revenue A 0.6 increase by 9% (Click to select)  decrease  increase  by  % (Click to select)  increase  decrease  constant B 1.3 decrease by 6% (Click to select)  increase  decrease  by  % (Click...
which of the following risk-free zero-coupon bonds could be bought for the lowest price? A. one...
which of the following risk-free zero-coupon bonds could be bought for the lowest price? A. one with a face value of $1,000 a ytm of 6.2% and 18 years to maturity B. one with a face value of $1,000 a ytm of 7.8% and 15 years to maturity C. with a face value of $1,000 a ytm of 6.8% and 18 years to maturity D.one with a face value of $1,000 a ytm of 5.9% and 20 years to maturity
Identify recent changes in the healthcare system and then name future changes or forces that will...
Identify recent changes in the healthcare system and then name future changes or forces that will initiate changes.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT