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The bond issuance will got influenced by following risks :
a) Inflation risk : During the inflacinary period, the effect return on the bond keeps on reducing.
b) currency risk : Reduction in the currency value reduces the return on the bonds and vice-versa.
c) liquidity risk: Price changes and supply and demand will alter the liquidity of a bond.
d) default risk : Adversely changes in the creditworthiness of the issuer and rating can decrease
the current market value of the bond which could result in a partial or total loss of an investment.
e) interest rate risk : As interest rates fluctuates, the yield on the bond will be adjusted
accordingly, ie. if interest rates rise, the price of a bond will fall and vise-versa.
f) reinvestment rate risk : The reinvestment rate and taking advantage of rising interest rates will
come from higher coupon and/or short maturities taken by the investor. On the adverse, the
situation would be vise-versa.
g) maturity risk : If the bond is maturing on the longer period, it will provide higher yield to the
investor. The maturity will bring the liquidity to the investor and the risk of the reinvestment.
=============
Solution
The bond issuance will got influenced by following risks :
a) Inflation risk : During the inflacinary period, the effect return on the bond keeps on reducing.
b) currency risk : Reduction in the currency value reduces the return on the bonds and vice-versa.
c) liquidity risk: Price changes and supply and demand will alter the liquidity of a bond.
d) default risk : Adversely changes in the creditworthiness of the issuer and rating can decrease
the current market value of the bond which could result in a partial or total loss of an investment.
e) interest rate risk : As interest rates fluctuates, the yield on the bond will be adjusted
accordingly, ie. if interest rates rise, the price of a bond will fall and vise-versa.
f) reinvestment rate risk : The reinvestment rate and taking advantage of rising interest rates will
come from higher coupon and/or short maturities taken by the investor. On the adverse, the
situation would be vise-versa.
g) maturity risk : If the bond is maturing on the longer period, it will provide higher yield to the
investor. The maturity will bring the liquidity to the investor and the risk of the reinvestment.
=============

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The bond issuance will got influenced by following risks a) Infla.pdf

  • 1. The bond issuance will got influenced by following risks : a) Inflation risk : During the inflacinary period, the effect return on the bond keeps on reducing. b) currency risk : Reduction in the currency value reduces the return on the bonds and vice-versa. c) liquidity risk: Price changes and supply and demand will alter the liquidity of a bond. d) default risk : Adversely changes in the creditworthiness of the issuer and rating can decrease the current market value of the bond which could result in a partial or total loss of an investment. e) interest rate risk : As interest rates fluctuates, the yield on the bond will be adjusted accordingly, ie. if interest rates rise, the price of a bond will fall and vise-versa. f) reinvestment rate risk : The reinvestment rate and taking advantage of rising interest rates will come from higher coupon and/or short maturities taken by the investor. On the adverse, the situation would be vise-versa. g) maturity risk : If the bond is maturing on the longer period, it will provide higher yield to the investor. The maturity will bring the liquidity to the investor and the risk of the reinvestment. ============= Solution The bond issuance will got influenced by following risks : a) Inflation risk : During the inflacinary period, the effect return on the bond keeps on reducing. b) currency risk : Reduction in the currency value reduces the return on the bonds and vice-versa. c) liquidity risk: Price changes and supply and demand will alter the liquidity of a bond. d) default risk : Adversely changes in the creditworthiness of the issuer and rating can decrease the current market value of the bond which could result in a partial or total loss of an investment. e) interest rate risk : As interest rates fluctuates, the yield on the bond will be adjusted accordingly, ie. if interest rates rise, the price of a bond will fall and vise-versa. f) reinvestment rate risk : The reinvestment rate and taking advantage of rising interest rates will come from higher coupon and/or short maturities taken by the investor. On the adverse, the situation would be vise-versa. g) maturity risk : If the bond is maturing on the longer period, it will provide higher yield to the investor. The maturity will bring the liquidity to the investor and the risk of the reinvestment. =============