Q544
Risk of fall in income due to fall in interest rates in future is classified as
A.
income risk
B.
investment risk
C.
reinvestment risk
AnswerD.
mature risk
Answer: Option C
Solution
Answer: Option C
Solution:
Risk of fall in income due to fall in interest rates in future is classified as reinvestment risk. Reinvestment risk is the probability that an investor will be unable to reinvest cash flows (e.g., coupon payments) at a rate comparable to the current investment's rate of return.