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What type of risk is the fundamental risk factor for fixed-income securities?
Correct Answer: D
Interest rate risk is the primary risk for fixed-income securities, as their value decreases when interest rates rise due to fixed cash flows. The feedback from the document states: "Interest rate risk is the fundamental risk factor for fixed-income securities such as bonds, mortgages and preferred shares. As interest rates move up, the value of a fixed-income security falls. This is because the cash flow from the fixed-income security is fixed." Reference: Chapter 11 - Conservative Mutual Fund ProductsLearning Domain: Analysis of Mutual Funds