--%>

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 : Negatively association to probability

    Adam Smith would have agreed mostly along with the concept which wages are: (i) positively associated to physical comfort when working. (ii) negatively related to the cost of learning the business. (iii) positively associated to the s

  • Q : Write short note on Demand Write short

    Write short note on Demand?

  • Q : Question 7 Question 7: You are given

    Question 7: You are given the following data about two firms: FIRM A Quantity 0 1 2 3 4 5 6 Total revenue ($) 0 10 20 30 40 50 60 Average revenue ($) ___ ___ ___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 14

  • Q : Risky forms of production to gain

    Entrepreneurs: (w) undertake risky forms of production to gain uncertain profits. (x) obtain interest payments for their services. (y) are usually overcompensated for their innovations. (z) receive virtually all their wealth by inheritance.

  • Q : Type of expenditure at the local level

    What is the most important source of revenue and the major type of expenditure at the local level?

  • 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 : Different types of leverages in

    Write down the different types of leverages which are computed for financial analysis?

  • Q : Marketing in action Which of the

    Which of the following are examples of public goods?

  • Q : What are the Functions of money Explain

    Explain in short the functions of money? Answer: (A) Medium of exchange: Money can be employed to make payments for all transactions of services and goods.

  • Q : Several determinants of demand besides

    Illustrate the several determinants of demand besides price which affect demand?