Which of the following risks are associated with Treasury securities?
A.
Credit risk
B.
Liquidity risk
C.
Prepayment risk
D.
Interest rate risk
The Answer Is:
D
This question includes an explanation.
Explanation:
Step by Step Explanation:
Interest Rate Risk: Treasury securities are sensitive to changes in interest rates. When rates rise, Treasury prices fall, exposing investors to price risk.
Incorrect Options:
Credit Risk: Virtually nonexistent for Treasuries, as they are backed by the U.S. government.
Liquidity Risk: Treasuries are highly liquid.
Prepayment Risk: Applies to mortgage-backed securities, not Treasuries.
SEC Bond Risk Disclosures: SEC Treasury Risks.
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