Which would be of greater concern to those who hold short-term investments: interest rate price risk...
Which would be of greater concern to those who hold short-term investments: interest rate price risk or reinvestment rate risk? Explain.
Homework Answers
In short term investment interest rate price is of greater risk
than Reinvestment risk. Because decrease in interest rate causes
increases in price and decrease in interest rate causes decreases
in price. So interest rate increase can cause depreciation in value
of the securities leading to capital loss.
Reinvestment risk is high in long term but not in short term.
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Which would be of greater concern to those who hold short-term
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