2007-03-01 06:12:13 · 3 answers · asked by aktblondie03 1 in Business & Finance ➔ Investing
The risk comes from getting a lower price than you paid for an obviously losing money.
This may be caused from:
Default: No one wants a bond that defaulted.
Downgrade: S&P, Fitch and Moodys downgrated its rating.
Interest raised: And as such your bond is less atractive.
2007-03-01 06:31:31 · answer #1 · answered by Carlos G 3 · 0⤊ 0⤋
The risk that by liquidating the bond now (selling it) you will give up the potential future profits of if a lot of cheaper bonds were issued in the future, which would make your higher yielding bond more valuable. If you still had years to the maturity date your bond would then sell for a Premium.
2007-03-01 06:21:19 · answer #2 · answered by Ronatnyu 7 · 0⤊ 0⤋
Your total return and yield-to-maturity probably won't be as high as when you purchased the bond. Also, you'll pay a fee/commission for selling it as opposed to receiving the maturity payment without any fees.
2007-03-01 06:16:23 · answer #3 · answered by ropman1 4 · 0⤊ 0⤋