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The risk that a bond will have to be sold at less than its purchase price...

The risk that a bond will have to be sold at less than its purchase price is called:

  • A. systemic risk
  • B. price risk
  • C. reinvestment risk
  • D. operational risk
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Answer #1

Option a, systemic risk is the risk of the failure of the whole system.

Option b, price risk is the risk of change in the value of stock based on fluctuations in the interest rate.

Option c, reinvestment risk is the risk that cash flows cannot be reinvested at a rate equal to the investment's rate of return.

Option d, operational risk is the risk of loss to an organization resulting from people, process, systems or external events.

Hence, the answer is option c.

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