Investment

What exactly do economists mean when they talk about investment or company spending? The purchase of stocks and bonds, as well as the trading of financial assets, are not included in the calculation of GDP. It refers to the purchase of new capital goods, such as commercial real estate (such as buildings, factories, and stores), […]

Interest rate risk is a concern for bond funds, and it can be significant, especially in a low-interest rate environment. Interest rates have nowhere to go but up when they are at record lows. When interest rates rise, the bond fund’s net asset value can fall dramatically. You can reduce this risk by investing in

Interest rate risk is a concern for bond funds, and it can be significant, especially in a low-interest rate environment. Interest rates have nowhere to go but up when they are at record lows. When interest rates rise, the bond fund’s net asset value can fall dramatically. You can reduce this risk by investing in

Bonds, while maybe less thrilling than stocks, are a crucial part of any well-diversified portfolio. Bonds are less volatile and risky than stocks, and when held to maturity, they can provide more consistent and stable returns. Bond interest rates are frequently greater than bank savings accounts, CDs, and money market accounts. Bonds also perform well

Most bonds pay a set interest rate that rises in value when interest rates fall, increasing demand and raising the bond’s price. If interest rates rise, investors will no longer favor the lower fixed interest rate offered by a bond, causing its price to fall. In practice, zero-coupon bonds are a good example of how

Because all interest payments on zero coupon bonds are compounded and paid at maturity, they are more sensitive to interest rate changes than bonds that pay interest semiannually. The higher the volatility, the longer the bond’s maturity. Are interest rates a factor in zero coupon bonds? Except for zero-coupon bonds, most bonds pay monthly interest

Economic development, competing currencies, and hedging options are all reasons that drive demand for Treasuries. Remember that anything that increases demand for long-term Treasury bonds tends to lower interest rates (higher demand = higher price = lower yield or interest rates), while anything that decreases demand for bonds tends to raise interest rates (lower demand

A risk-free asset is one with a guaranteed future return and almost little chance of loss. Because the US government backs them with its “full confidence and credit,” debt obligations issued by the US Treasury (bonds, notes, and especially Treasury bills) are considered risk-free. The return on risk-free assets is very close to the present

Treasury securities (“Treasuries”) are issued by the federal government and are considered to be among the safest investments available since they are guaranteed by the US government’s “full faith and credit.” This means that no matter what happens—recession, inflation, or war—the US government will protect its bondholders. Treasuries are a liquid asset as well. Every

Treasury securities (“Treasuries”) are issued by the federal government and are considered to be among the safest investments available since they are guaranteed by the US government’s “full faith and credit.” This means that no matter what happens—recession, inflation, or war—the US government will protect its bondholders. Treasuries are a liquid asset as well. Every