单选题 Biggs, Inc., holds a bond portfolio that is, on average, trading below par value. They have faced some cash flow problems of late and have used the bond interest payments for operating expenses. The bonds are callable. Given the current situation, Biggs faces which types of risk? A. Interest rate risk. B. Interest rate risk and reinvestment risk. C. Interest rate risk and call risk.

【正确答案】 A

【答案解析】The bonds are trading below par, so rates have increased and, at this point, neither call risk nor reinvestment risk is significant. The firm faces interest rate risk because their bond portfolio has decreased in value due to increasing market interest rates.