Question

Robert bought a house with a 6 percent interest rate. Three months later, the rate dropped to 4.35 percent. Robert was frustrated that he bought his house at the wrong time. What type of risk does this BEST demonstrate? A. Income risk B. Interest rate risk C. Personal risk D. Inflation risk

Answer 1

Answer:

b

Step-by-step explanation:

Interest rate risk is the risk that a fall in interest rate would decrease the value of a fixed rate investment. e.g. bonds , real estate.

Interest rate dropped 3 months after the house was bought. Robert is facing interest rate risk

Income risk is the risk that the stream of income received from a particular investment would drop as a result of a fall in interest rate.

Inflation risk is the risk that inflation would decrease the value of an investment