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Unformatted text preview: Frank J. Fabozzi Bond Markets, Analysis and Strategies, Third Edition, 1996 Liquidity Risk Ease of selling, spread between Bid/Ask quotes Volatility Risk Embedded options (e.g., sinking funds) compound risk Reinvestment Risk Yield-to-Maturity (YTM) assumes all coupons reinvested at YTM Risk Risk Innovative bond portfolios (e.g., hedging) not knowing what the risk of the security is We did not know this could happen...
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