Martin purchased a 10 year U.S. Treasury bond about the same time as his friend

Question

Martin purchased a 10 year U.S. Treasury bond about the same time as his friend Robert purchased a 10 year corporate bond issued by Volkswagen in Germany. Which of the following are risks that Robert needs to be concerned about that his friend Martin does not have with his bond?

a.

Liquidity risk and exchange rate risk

b.

Inflation risk and country risk

c.

Maturity risk and exchange rate risk

d.

Default risk and liquidity risk

a.

Liquidity risk and exchange rate risk

b.

Inflation risk and country risk

c.

Maturity risk and exchange rate risk

d.

Default risk and liquidity risk

Explanation / Answer

Default risk and liquidity risk that Robert needs to be concerned about that his friend Martin does not have with his bond. So the option d is correct.

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