Series 82: 3.4.3.1.2. Interest Rate Risk

3.4.3.1.2. Interest Rate Risk

Fixed-income securities, which include both bonds and preferred stock, are subject to interest rate risk. Interest rate risk is the risk that when interest rates rise, the price of the bond or preferred stock will decline. As discussed earlier, when interest rates rise, prices of fixed-income securities decline, because investors want to purchase bonds with the new higher rates, and previously