n NISM Certifications
XV NISM Series XV
Medium

Which type of investment risk is associated with fluctuations in interest rates?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Credit risk

  2. B

    Liquidity risk

  3. C

    Market risk

  4. Interest rate risk

    Correct answer

Why this is the answer

Interest rate risk arises when changes in market interest rates affect the value of fixed-income securities, like bonds. Credit risk relates to default, liquidity risk to inability to convert assets to cash, and market risk to general price volatility.

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