Multiple choice

Which of the following risks do not affect a pure debt fund?

  1. Price fluctuations of the debt securities

  2. Share price movements

  3. Interest volatility

  4. Default by issuer on payment of interest or principal

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Pure debt funds invest in debt securities and are affected by interest rate volatility (which changes bond prices) and default risk. However, they are not affected by share price movements because they don't invest in equities - share prices are an equity market concept.