This video examines various risks which are associated with investing in bonds. The areas of risk covered include:
- Default Risk: the risk that the issuer will not be able to pay back the loan
- Inflationary Risk: the risk that spending power will be eroded (-ve rate of return).
- Callability Risk: the risk that the bond will be bought back for less than you paid for it.
- Liquidity risk: the risk that you won't be able to sell when you want to.
- Political Risk: actions taken by governments which affect the bond market
- Interest rate risk: the risk that interest rates will rise thus lowering bond prices.
