【正确答案】
A: As an investment manager, can you conclude the types of risks?
B: So far we have used the term "risk" rather loosely. There are altogether three types of risks; default risk, purchasing-pewer risk and market risk.
A: Yes, I know. According to the literal meaning, default risk is the risk that the borrower will simply not repay the loan, due to either dishonesty or plain inability to do so.
B: Yes. And purchasing-power risk is the risk that, due to an unexpectedly high inflation rate, the future interest payments, and the principal of the loan when finally repaid, will have less purchasing power than .the lender anticipated at the time the loan was made.
A: I've heard that market risk is the risk that the market value of security will fall because interest rates will rise.
B: That's right. So it is also called interest-rate risk.