A blue chip corporation is making a bond offering that is rated aaa. during the issue’s first year of trading, what is the greatest potential risk that a bondholder assumes?

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25-07-2022
Social Studies

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A blue chip corporation is making a bond offering that is rated aaa. during the issue’s first year of trading, what is the greatest potential risk that a bondholder assumes?

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anthougo anthougo · Answer 1 · 2022-08-04T17:22:05+02:00

The greatest potential risk that a bondholder of a blue chip corporation assumes during the first year of trading is a. interest rate risk.

What is interest rate risk?

Interest rate risk refers to the probability of a decline in bond value when unexpected changes or fluctuations occur in interest rates.

Interest rate risk affects fixed-income assets, like bonds more than equity investments.

Inflation risk occurs when there is a general decline in the purchasing power of the currency. Default risk is not associated with a bond in its first year when compared with the maturity year. The foreign exchange rate risk refers to the uncertainty or fluctuations in exchange rates.

Question Completion with Answer Options:

a. interest rate risk

b. default risk

c. inflation risk

d. forex rate risk

Thus, the greatest potential risk that a bondholder of a blue chip corporation assumes during the first year of trading is a. interest rate risk.

Learn more about interest rate risk at https://brainly.com/question/13163076

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