Economics · Financial Markets
In relation to an irredeemable security paying a fixed rate of interest, which of the following statements is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1As risk rises, the market value of the security will rise to ensure that investors receive a reduced yield
- 2As risk rises, the market value of the security will rise to ensure that investors receive an increased yield
- 3As risk rises, the market value of the security will fall to ensure that investors receive a reduced yield
- 4As risk rises, the market value of the security will fall to ensure that investors receive an increased yield✓
Correct answer
As risk rises, the market value of the security will fall to ensure that investors receive an increased yield
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