Essay Question #4

Essay Question #4 - James Wallace BUS 404 MW Essay Question...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
James Wallace BUS 404 MW Essay Question # 4 As an investor, there are a variety of instruments out there that offer a vast range of risk and reward. A good investor will always diversify an investment portfolio in order to reduce his/her exposure to risk. Investing in bonds provides predictable income and a promise of repayment of principal. In today’s economy this can be a comforting idea for an investor. Like any other investment product bonds do have drawbacks. Sometimes bonds can fail to keep up with inflation, in which case the investor will have less purchasing power for the same interest payment that they may have assumed to be equal. For someone who is retired and relying on their interest income to purchase basic necessities, this could be a big problem. In 1997, the U.S. Treasury began issuing inflation- indexed bonds. These bonds provided returns that were tied to inflation rates. By changing the face value of the bond every six months to correspond with inflation rates the
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/06/2011 for the course FINANCE 235 taught by Professor Prof.duo during the Spring '11 term at SUNY Oneonta.

Page1 / 2

Essay Question #4 - James Wallace BUS 404 MW Essay Question...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online