A client approaches you concerned about their bond portfolio. They've read that the Bank of Canada might raise interest rates soon, and they're worried about the impact on their bond investments. Which type of investment risk is their primary concern?

Question: A client approaches you concerned about their bond portfolio. They've read that the Bank of Canada might raise interest rates soon, and they're worried about the impact on their bond investments. Which type of investment risk is their primary concern?

Answer options: ✅ Interest Rate Risk

• Market Risk
• Credit Risk
• Inflation Risk

Correct answer: Interest Rate Risk

Explanation: Interest rate risk is the risk that changes in prevailing interest rates will negatively affect the value of a bond or other fixed-income investment. When interest rates rise, the market value of existing bonds typically falls.