--%>
Assignment Help - homework help

Illustrate the Risks involved with bonds

Illustrate the Risks involved with bonds?

E

Expert

Verified

Risks involved with bonds include:

a. Capital risk, which means that the market price of a bond can change if market interest rates change and a holder needs to sell a bond before its maturity date.  Note that the market price of a bond varies inversely with market interest rates.

b. Risk of unexpected inflation means that the purchasing power of the bond will fall because its interest rate is less than the inflation rate.

   Related Questions in Business Economics

  • Q : Illustrate Scarcity and choice of

    Illustrate Scarcity and choice of Economic Perspective?

    		•
  • Q : Least probability of competitive market

    The competitive market system is least probable to be allocatively unproductive as a result of: (w) externalities and public goods. (x) cutthroat competition and the outsourcing of low-wage jobs to less grown countries. (y) the underproduction of a go

    		•
  • Q : Demand forecasting consumer's interview

    consumer's interview method for demand forecasting(point to point explain)

    		•
  • Q : Scientific method how does it relate to

    What is the scientific method and how does it relate to theoretical economics?  What is the difference between a hypothesis and an economic law or principle?

    		•
  • Q : Limitation of intermediaries for

    Intermediaries do not classically: (w) reduce transaction costs. (x) absorb risk. (y) try to make profits. (z) cause prices to be more volatile. I need a good answer on the topic of Economic problems. Please give m

    		•
  • Q : Market system & a command economy try

    Contrast how a market system and a command economy try to cope with economic scarcity?

    		•
  • Q : Describe the output effects of Inflation

    Describe the output effects of Inflation?

    		•
  • Q : Exchange rate in purchasing power parity

    Question: In June 2005, a Big Mac sold for 6,000 pesos in Colombia and $3.00 in the United States.  The exchange rate in June 2005 was 2,300 pesos per US Dollar.  So, on Big Mac purchasing power parity gr

    		•
  • Q : Unpredictable and frequent fluctuations

    Adam Smith attributed unpredictable and frequent fluctuations within profits to: (i) variations in the prices of the goods a firm or person produces and sells. (ii) the bad or good fortune of rivals. (iii) the good or bad fortune of customers. (iv) tr

    		•
  • Q : Define Benefit Cost Ratio or

    Briefly describe the term Benefit Cost Ratio (or B/C Ratio) or Profitability Index (or PI)?

    		•