Default-free bonds can still have:a. Price change risk b. Interest rate risk c. Marketability risk d. ...

The correct option would be All of the above or
e.

A default free-bond is one where the owner of the bond
is assured when the bond is issued of getting the interest which was specified when the
bond was issued and the principle when the bond
expires.

This fact though, does not eliminate all risks
associated with the ownership of bonds. The price of a bond is dependent on many
variables, some of which include a change in the prevailing interest rate. A bond holder
would not be able to find a buyer willing to buy the bond for the price it was initially
purchased at if the interest rates have gone up.

The
marketability risk occurs when the holder of the bond cannot find a buyer for the bonds
held due to any reason. Perhaps people are now more interested in investing in the stock
market and the amount allocated to buy bonds has been
reduced.

Political risk could be a coup or a revolt in the
country that has issued the bond. New investors are now not confident that the economy
of the country would remain stable to assure that the interest and the principle on the
bond will be received on time in the future. To accommodate for the
extra risk, the marketable price of the bond comes down.

In
spite of a bond being default-free when it was bought, there are still many risks
associated with it.