n NISM Certifications
NSM General NISM
Medium

Which of the following is an interest rate risk?

Practice question from NISM Series IV - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Price Risk

  2. B

    Reinvestment Risk

  3. Both 1 and 2

    Correct answer

  4. D

    None of the above

Why this is the answer

Interest rate risk includes both price risk (bond prices changing due to interest rate movements) and reinvestment risk (uncertainty in reinvestment rates of interim cash flows).

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