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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Social Studies

2 January, 17:14

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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Luciano Leblanc · 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.