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MC Question 6

In relation to an irredeemable security paying a fixed rate of interest, which of the following statements is correct?

A. As risk rises, the market value of the security will fall to ensure that investors receive an increased yield
B. As risk rises, the market value of the security will fall to ensure that investors receive a reduced yield
C. As risk rises, the market value of the security will rise to ensure that investors receive an increased yield
D. As risk rises, the market value of the security will rise to ensure that investors receive a reduced yield