Bonds are major components of the global financial system and offer investors a relatively stable source of income. However, investors will not make intelligent decisions on adding bonds to their...... Read More
Author: FINXL12
Some of the bonds, especially those issued by small companies or less common governments, might not be very liquid since they cannot be easily traded. This may mean that when...... Read More
Inflation reduces the value of money; thus, it diminishes the purchase power of the fixed interest received by the bond. If inflation moves higher than the coupon rate of the...... Read More
The chance that interest or principal payments will not be made because the issuer defaults. For lower-credit-rated issuers, \"junk\" bonds, credit risk is higher, and so are yields to compensate...... Read More
It has already been established that the price of bonds moves in an inverse relation with interest rates. This means that if interest rates are increased, then the market value...... Read More
While bonds are safer compared to equities, they are not a completely risk-free investment. These include the following risks: 1. Interest Rate Risk: It has already been established that the...... Read More
The price of a bond is responsive to prevailing interest rates in the market. This means that an increase in interest rates lowers the price of a bond and vice...... Read More
These are hybrid securities that make it possible for bondholders to convert their bonds into a specified number of shares of the issuer\'s common stock. This conversion feature presents possibilities...... Read More
Such bonds are issued by companies to raise capital for expansion, acquisitions, and other requirements. Corporate bonds usually yield higher than government bonds but pose more risks-that is, if a...... Read More
These are issued by local or state government and raised funds for public projects such as schools, highways, and hospitals. In most cases, these bonds offer tax-free interest income for...... Read More