Question

Uncertainty about interest-rate movements and returns is called Question 3 options: A) market potential. B) interest-rate irregularities. C) interest-rate risk. D) financial creativity.

Answer 1

Answer:

The correct answer is letter "C": interest-rate risk.

Explanation:

Interest-rate risk is the threat that already owned investments will lose market value if new investments with higher interest rates come onto the market. It has a more direct effect on the value of bonds than stocks and is a major risk to all bondholders. Bond prices decrease and the interest rate increases and when bond prices increase it is because interest rate decreased.