Week 3 Bonds 2 - bonds considerably less risky than stocks....

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Although bonds do carry some risk, they are considered less risky than stocks for many reasons, such as: - Bonds promise to return their face value unlike stocks - Most bonds pay a fixed rate of interest, where stocks may or may not pay out dividends. - Historically the bond market faces less vulnerability than the stock market. As long as I understand this week’s material properly, the following are some ways a company can reduce the risks on their bonds and in turn make them more attractive. - Offer a fixed interest rate – because this is one of the defining characteristics that make
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Unformatted text preview: bonds considerably less risky than stocks. -Have a no-call provision in the agreement this means the company would not be able to call or force redemption on a bond before its maturity date. -Offer short term bonds at the highest rate feasible to your company short term bonds are less susceptible to interest or inflation risks. Source: http://www.investinginbonds.com/learnmore.asp?catid=3&id=383...
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This note was uploaded on 03/26/2012 for the course F1515 F1515 taught by Professor Stan during the Spring '10 term at Keller Graduate School of Management.

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