Risks Inherent in Bonds
Many bond market commentators will use duration as a key measure of the risk of a bond, however, there are plenty of other risks that bond investors are taking on. Lindsey outlines some of these risks, including credit and liquidity risk.
Overview
Investing in bonds presents investors with a variety of risks to analyse. Some included are credit risk, credit spreads risk and liquidity risk.
Key learning objectives:
Define the major risks associated with bonds
Identify the relationship between risk and return in the bond market
Summary
Expert
Lindsey Matthews
Lindsey runs Perfordiant, an investment risk and performance consulting firm. He has worked in financial markets since 1992. Lindsey became an MD in fixed income and equities, ran a Risk function, and was on the management team of an Asset Management fintech business. Lindsey is now a Visiting Fellow at the Henley Business School, and resides on the board of CFA UK.
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