Question

Brian Smith, the CEO of Carter National Bank, anticipates that interest rates may fall in the future and as a result buys $100 million in 30 year Treasury Bonds for the bank's security portfolio. Instead, interest rates rise, causing the value of these bonds to fall. This would be an example of which of the following types of risk?

A. Operational risk

B. Legal risk

C. Compliance risk

D. Strategic risk

E. Reputation risk

Answer

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