Q615
An effect of interest rate risk and investment risk on a bond's yield is classified as
A.
reinvestment premium
B.
investment risk premium
C.
maturity risk premium
AnswerD.
defaulter's premium
Answer: Option C
Solution
Answer: Option C
Solution:
An effect of interest rate risk and investment risk on a bond's yield is classified as maturity risk premium. A maturity risk premium is the amount of extra return you'll see on your investment by purchasing a bond with a longer maturity date.