Final answer:
It is false that interest rate risk is not a type of pure risk, as interest rate risk can cause fluctuations in an investment's value due to changes in market interest rates.
Step-by-step explanation:
Interest rate risk is indeed a type of risk associated with investments such as bonds; it is false to assert that it is not a type of pure risk. Pure risk involves situations where there is a chance of loss or no loss, with no potential for gain, such as with insurance policies. However, interest rate risk specifically refers to the potential for an investment's value to fluctuate due to changes in the overall interest rates in the economy. For example, if you purchase a long-term bond with a fixed interest rate of 6%, and shortly afterwards the market interest rates rise to 9%, the value of your bond decreases because new bonds are issued at this higher rate, making your bond less attractive. This is particularly important to consider when investing in fixed-income securities, where the expected rate of return might suffer due to changes in market rates. Therefore, while interest rate risk does involve potential losses, it is inherently linked to the market's performance rather than being a pure risk.