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re: Buying bonds in laymans terms

Posted on 12/5/12 at 11:57 am to
Posted by LSURussian
Member since Feb 2005
126963 posts
Posted on 12/5/12 at 11:57 am to
quote:

Is there much risk?

Credit risk? No.

Interest rate risk? Yes...a bunch. Even with a duration of 3.4 you could see an entire year's worth of income wiped out in a loss of market value if rates spike up at all.
Posted by Broke
AKA Buttercup
Member since Sep 2006
65050 posts
Posted on 12/5/12 at 12:12 pm to
quote:

Credit risk? No.

Interest rate risk? Yes...a bunch. Even with a duration of 3.4 you could see an entire year's worth of income wiped out in a loss of market value if rates spike up at all.


Ditto. You could also see the value of the bond possibly fall to 80 cents on the dollar or worse if it's a considerable spike
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