Illustrate the Risks involved with bonds
Illustrate the Risks involved with bonds?
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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.
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Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below: Q : Laissez-faire philosophy of government As per to the laissez-faire philosophy of government,: (1) economy works best while all investment decisions are centralized. (2) market system works best along with only minimal government intervention. (3) government must be restricted to stabilizin
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