Interest rate changes and their impact on the fund and its share price can be sudden and unpredictable. Funds that concentrate their investments in a single industry may face increased risk of price fluctuation over more diversified funds due to adverse developments within that industry. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country.
These risks are generally intensified in emerging markets. Smaller- and mid-cap stocks tend to be more volatile and less liquid than those of larger companies.
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High-yield securities have a greater risk of default and tend to be more volatile than higher-rated debt securities. Consult a fund's prospectus for additional information on these and other risks.
Coupon (bond) - Wikipedia
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- The Relationship Between Bonds and Interest Rates!
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How does a bond's coupon interest rate affect its price?
Countervailing Duties Duties that are imposed in order to counter the negative impact of import subsidies to protect domestic producers are called countervailing duties. Credit Default Swaps Definition: Credit default swaps CDS are a type of insurance against default risk by a particular company. The company is called the reference entity and the default is called credit event. It is a contract between two parties, called protection buyer and protection seller.
Under the contract, the protection buyer is compensated for any loss emanating from a credit event in a reference instrument. In return, the protection buyer makes periodic payments to the protection seller.
In the event of a default, the buyer receives the face value of the bond or loan from the protection seller. In this, A is the protection buyer and B is the protection seller. If the reference entity does not default, the protection buyer keeps on paying bps of Rs 50 crore, which is Rs 50 lakh, to the protection seller every year. On the contrary, if a credit event occurs, the protection buyer will be compensated fully by the protection seller. The settlement of the CDS takes place either through cash settlement or physical settlement. For cash settlement, the price is set by polling the dealers and a mid-market value of the reference obligation is used for settlement.
There are different types of credit events such as bankruptcy, failure to pay, and restructuring. Today, your broker is more likely to deposit the payments straight into your account. Some bonds , known as zero-coupon bonds, do not pay coupons, and instead are sold at a price less than par value.
The Difference Between a Bond's Yield Rate and Its Coupon Rate
Show 5 More. Our in-depth tools give millions of people across the globe highly detailed and thoroughly explained answers to their most important financial questions. Each month, more than 1 million visitors in countries across the globe turn to InvestingAnswers. Financial Dictionary Calculators Articles. Coupon Rate. What it is: