SIE: 5.1.1.1.3. Interest Rate Risk

5.1.1.1.3.  Interest Rate Risk

Fixed-income securities, which include bonds and preferred stock, are subject to interest rate risk. Interest rate risk is the risk that when interest rates rise, the price of bonds or preferred stock will decline. This is because investors prefer to purchase bonds with the new, higher rates, rather than the previously issued bonds with lower interest rate