Cap risk, contingent claim risk, and interest rate risk

[streetplay]

Hi,
I’ve got a question on the three risks faced by those portfolios that are backing a fixed set of liabilities.
On one question in curriculum book, it says a fixed-income portfolio with non-callable bonds backing a future liability is subject to interest rate risk, cap risk, and contigent claim risk.
I do understand that it is subject to interest rate risk, but why is it also subject to two other risks?
Since it is not a portfolio with floating rate bonds and non-callable issues, the two other risks are not to be concerned, from my view.
Can anyone please explain why it is subject to all three risks?
Thank you.

 

[gringo_bob]

I was confused by this question as well. The text states that contingent claims risk is only in relation to calls and the questions specifically states that its a non-callable bond portfolio so why is the portfolio subject to contingent claim risk?

 

[cpk123]

question is asking in more generic terms - not related to the particular portfolio…

Quote:
However, he is concerned about the various risks associated with the liabilities including interest rate risk, contingent claim risk, and cap risk.

and question asks

Quote:
Are Choo’s concerns regarding various risks of funding the hospital liability correct?

which is obviously true - so YES is the answer. It IS NOT related to the particular liability he is trying to look at. It is a “googly” question.