Question

Please match each of the following terms to the description of best fit.

A.	Risk associated with price fluctuations caused by interest rate changes
B.	This is the risk that a firm's cost of debt will fall and as a result reinvested coupon payments will earn less yield moving forward.
C.	Risk that the Borrower will not make payments on time or in full
D.	Coupon Payments typically follow a benchmark market rate
E.	All of the yield is determined by the difference in the price of the bond and the par value
F.	Can be assessed using the perpetuity formula

	Interest Rate Risk
	Reinvestment Rate Risk
	Default Risk
	Floating rate bond
	Zero Coupon Bond
	Consol Bond

Answer 1

hi

Risk associated with price fluctuations caused by interest rate changes - interest Rate risk

This is the risk that a firm's cost of debt will fall and as a result reinvested coupon payments will earn less yield moving forward.- Reinvestment rate risk

Risk that the Borrower will not make payments on time or in full - Default risk

Coupon Payments typically follow a benchmark market rate - Floating rate bond

All of the yield is determined by the difference in the price of the bond and the par value - Zero coupon bond

Can be assessed using the perpetuity formula - Consol bond

Thanks