The following points highlight the seven main types of risk on investment. The types are: 1. Interest Rate Risk / Market Risk 2. Credit Risk / Counter-Party Risk 3. Call Risk / Prepayment Risk 4. Put Risk 5. Yield Curve Risk 6. Inflation Risk 7. Sovereign Risk. 1. Interest Rate Risk / Market Risk: If we talk of fixed income [...]
Bonds can be differentiated in the way they earn income for you. On one hand we have simple annual coupon bearing bonds that pay you interest on a fixed date every year till maturity; while on the other hand, we have cumulative coupon bonds which ensure that your interest too earns interest and pay you the final accrual at the [...]
The following points highlight the factors that influence interest rate movements in the economy. The factors are: 1. Inflation 2. Rate Signals from the RBI 3. Banking System Liquidity 4. Deposits in the Banking System 5. Fiscal Deficit and Government Borrowings. Factor # 1. Inflation: Inflation refers to the increase in the price levels in the economy. It refers to [...]