SIE Exam Question 34: Answer and Explanation

Question: 34

The risk that a security will be redeemed prior to its maturity date is known as _________.

• A. Market risk
• B. Call risk
• C. Event risk
• D. Systematic risk

Correct Answer: B

Explanation:

The risk that a security will be redeemed prior to its maturity date is known as call risk. Market risk is the potential for loss due to the performance of the financial market. Event risk is the risk of an unexpected event negatively affecting an investment's value. Systematic risk is essentially the same as market risk.