FixedIncomeRisks

FixedIncomeRisks - IncomeSecuri8es ReturnComponents...

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Risks Associated with Fixed‐ Income Securi8es
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Return Components Return obtained from inves8ng in a Fxed income security from the day it is purchased to the day it is sold has two components: Change in market value Cash flows received from the security during the 8me it is held, plus addi8onal income from reinvestment of these cash flows
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Risks Associated with Fixed‐Income Investments Market, or interest‐rate risk Reinvestment risk Timing, or call, risk Credit, or default, risk Yield curve, or maturity, risk Infla8on, or purchasing power, risk Liquidity risk Exchange rate, or currency, risk Vola8lity risk Poli8cal or legal risk
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Interest Rate Risk Most important risk for most Fxed income investors. Usually, the value of a Fxed income security decreases as interest rates rise. Selling when rates have risen will result in a loss. There are excep8ons (e.g. put op8ons).
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FixedIncomeRisks - IncomeSecuri8es ReturnComponents...

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