Exchange-traded notes are primarily susceptible to which types of risks?

Exchange-traded notes (ETNs) are primarily susceptible to credit and market risk, which makes this choice the correct answer.

Credit risk pertains to the possibility that the issuer of the ETN may default on its obligations, affecting the value of the note. Since ETNs are unsecured debt securities backed by the creditworthiness of the issuer, the performance of the ETN is directly tied to the issuer's financial stability. If the issuer encounters financial difficulties or defaults, investors may face significant losses.

Market risk involves the fluctuations in the value of the ETN caused by market conditions, including supply and demand, investor sentiment, and broader economic factors. As ETNs are traded on the open market, their prices can be influenced by these same market dynamics, exposing investors to potential volatility and loss regardless of the performance of the underlying assets or index.

The other types of risks mentioned in the options, such as regulatory and interest-rate risk, legislative and business risk, and currency and political risk, have a lesser direct impact on ETNs compared to credit and market risk. While they may play a role in the broader investment landscape, they are not the primary concerns specifically associated with ETNs.