--%>
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 : Utilitarianism of Jeremy Bentham The

    The utilitarianism of Jeremy Bentham is generally closely akin to the philosophies of: (1) Epicurianism and hedonism. (2) pragmatism and instrumentalism. (3) asceticism and stoicism. (4) dialecticism and materialism. (5) fundamentalism and predestinat

    		•
  • Q : Fixed or managed exchange rate

    Question: A country with a fixed or managed exchange rate would consider i.___________________ its currency to gain competitive advantage vis-à-vis its trade

    		•
  • Q : When Economic efficiency is present

    Economic efficiency is present while the: (w) economic system is a pure socialist system. (x) resources obtainable are slightly wasted. (y) value of output is maximized, specified restricted resources. (z) utilization of resources is minimized. <

    		•
  • Q : Increase in spending for space research

    Use the circular flow model to confirm this assertion for $50 million increase in spending for space research?

    		•
  • Q : Elucidate reallocation of Government

    Elucidate reallocation of Government resources?

    		•
  • Q : Heterodox approach for more production

    From the heterodox approach, what options does the enterprise need to produce more output? What effect do these options put on its cost structure?

    		•
  • Q : Variation of wages in inverse proportion

    This wages vary within inverse proportion to the agreeableness and constancy of the employment was a perception first explicitly stated through: (i) Adam Smith. (ii) Karl Marx. (iii) Thomas Malthus. (iv) John Stuart Mill. (v) David Ricardo.

  • Q : Higher opportunity costs of attendance

    Economics professors would attribute students’ higher rates of attendance on days while examinations are administered to the: (w) intensified needs to learn valuable material. (x) higher opportunity costs of missing set relative to other schedul

    		•
  • Q : Importance of Economics Importance of

    Importance of Economics:Economics has become one of the major branches of social sciences. This is of enormous practical value in our day by day life. In pure sciences, we study the subject

    		•
  • Q : Illustrate the term Economic Rationale

    Illustrate the term Economic Rationale?

    		•