Bonds (8)

How risky are bonds? (1)

As is the case with all investments, there is some degree of risk in investing in bonds.

Two important risks are

a) credit risk and

b) interest rate risk.


Credit risk

is the risk that the issuer will default - that is,

i) it cannot pay the coupons or part of them, or

ii) it is unable to pay the principal on maturity.


This is why bonds are rated .