Which is NOT one of the four key areas of risk typically assessed in fixed-income investing?

Which is NOT one of the four key areas of risk typically assessed in fixed-income investing?

• A. Yield curve risk
• B. Market risk
• C. Credit risk
• D. Interest rate risk

Answer: (B)

In fixed-income risk assessment, the main concerns are issuer credit risk, how prices respond to changes in interest rates (including how the yield curve shifts), liquidity risk, and reinvestment risk. Yield curve risk is a specific aspect of interest rate risk because changes in the curve affect how different maturities are valued. Market risk, while it affects bonds, is a broader umbrella term that isn’t usually listed as one of the four core fixed-income risk areas. So market risk is the one that doesn’t belong among the standard four fixed-income risks.

In fixed-income risk assessment, the main concerns are issuer credit risk, how prices respond to changes in interest rates (including how the yield curve shifts), liquidity risk, and reinvestment risk. Yield curve risk is a specific aspect of interest rate risk because changes in the curve affect how different maturities are valued. Market risk, while it affects bonds, is a broader umbrella term that isn’t usually listed as one of the four core fixed-income risk areas. So market risk is the one that doesn’t belong among the standard four fixed-income risks.