If you purchase a bond that matures in 5 years but you may have to cash it in before that time, you are exposed to credit risk b default risk C interest rate risk d liquidity risk

The correct answer is C. interest rate risk.<br /><br />When you purchase a bond that matures in 5 years but may have to cash it in before that time, you are exposed to interest rate risk. Interest rate risk refers to the potential for the value of the bond to fluctuate due to changes in interest rates. If interest rates rise, the value of the bond will decrease, and if interest rates fall, the value of the bond will increase. This is because the bond's fixed interest payments become less attractive compared to new bonds issued at higher interest rates. Therefore, if you need to cash in the bond before maturity, you may have to sell it at a lower price than its face value, resulting in a capital loss.