Show transcribed image text The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: U.S. Treasury securities (USTs), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the dropdown menus to label each security's profile correctly: Which type of bonds offer a higher yield? Noncallable bonds Callable bonds Answer the following question based on your understanding of interest rate risk and reinvestment rate risk. True or False: Assuming all else is equal, short-term securities are exposed to higher reinvestment rate risk than long-term securities. True False

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