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Highlight the risks faced by bond holders

      

Highlight the risks faced by bond holders

  

Answers


Dana
Default risk: the chance that the issuer will not make the promised payments
Inflation risk: increase in interest rate will reduce the future value of the bonds returns
Interest rate risk: interest rate can change the price of the bonds. An increase in the interest rate will reduce the future value of the bond hence investors will suffer capital losses

Dana05 answered the question on July 18, 2019 at 19:29


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