Frank Barlowe is retiring soon, so he's concerned about his investments providing him with a steady income every year. He's aware that if interest rates, the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in interest rates might lead to annual income from his investments. What kind of risk is Frank most concerned about protecting against?

Question

Social Studies

Aniya Stone

23 June, 11:33

Frank Barlowe is retiring soon, so he's concerned about his investments providing him with a steady income every year. He's aware that if interest rates, the potential earnings power of the cash flow from his investments will increase. In particular, he is concerned that a decline in interest rates might lead to annual income from his investments. What kind of risk is Frank most concerned about protecting against?

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Answers (1)

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Samantha Wiley · Answer 1

Answer: Interest rate risk

Explanation:

Frank is initially most worried about interest rate risk. He could possibly get his annual income negatively influenced by a potential declining on interest rates, and if that ever happens money will be taken from him since he's an investor. As a consequence, and since he's going to be retired, he most probably would have to find some other business in order to count with a steady income.