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Lower coupon bonds are more volatile because they have a higher duration, which means they are more sensitive to changes in interest rates. This sensitivity can lead to larger price fluctuations in response to market conditions.

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5mo ago

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Are bond prices with fixed coupon rates periodic payments and interest rates inversely related directly related or unrelated?

Bond prices with fixed coupon rates and interest rates are inversely related. When interest rates rise, newly issued bonds offer higher coupon payments, making existing bonds with lower rates less attractive, which causes their prices to fall. Conversely, when interest rates decrease, existing bonds with fixed coupon rates become more valuable, leading to an increase in their prices. This inverse relationship is a fundamental principle in bond investing.


Which bonds will have the higher coupon rate a secured debt or a debenture?

i guess debenture, since its more riskier!


What correctly orders the investments from lower risk to higher risk?

Investments can generally be ordered from lower risk to higher risk as follows: government bonds, corporate bonds, dividend-paying stocks, and then growth stocks. Government bonds are considered the safest due to their backing by the government, while corporate bonds carry slightly more risk due to the creditworthiness of the issuing company. Dividend-paying stocks typically offer more stability than growth stocks, which can be volatile and depend heavily on market performance.


Can you explain what coupon frequency is and how it impacts the value of a bond?

Coupon frequency refers to how often a bond pays interest to its holder, typically semi-annually or annually. The higher the coupon frequency, the more often the bondholder receives interest payments, which can impact the overall value of the bond. Bonds with higher coupon frequencies are generally more attractive to investors because they provide a more regular income stream.


How do you explain and describe in simple English the risks associated in investing in bonds?

Investing in Bonds is even more volatile than investing in individual stocks. Unless you are a genuine expert, (I can tell from here that you are not), don't do it. Cheers

Related Questions

Who require more temperature for easily evaporation its volatile liquid or non volatile liquid?

Volatile liquids require less temperature for easy evaporation compared to non-volatile liquids. This is because volatile liquids have lower boiling points and higher vapor pressure, making them more likely to evaporate even at lower temperatures.


Which is a riskier investment corporate bonds or technology stocks?

Tech Stocks will be generally more volatile and thus considered more risky.


Are bond prices with fixed coupon rates periodic payments and interest rates inversely related directly related or unrelated?

Bond prices with fixed coupon rates and interest rates are inversely related. When interest rates rise, newly issued bonds offer higher coupon payments, making existing bonds with lower rates less attractive, which causes their prices to fall. Conversely, when interest rates decrease, existing bonds with fixed coupon rates become more valuable, leading to an increase in their prices. This inverse relationship is a fundamental principle in bond investing.


Which bonds will have the higher coupon rate a secured debt or a debenture?

i guess debenture, since its more riskier!


Why are covalent bonds more volatile than ionic bonds?

Covalent bonds are typically more volatile than ionic bonds because the shared electrons in covalent bonds are not held as tightly as the transferred electrons in ionic bonds. This allows covalent bonds to break more easily under certain conditions, leading to greater volatility. Ionic bonds, on the other hand, involve a strong attraction between oppositely charged ions, which makes them less likely to break apart.


Why do people like zero coupon bonds?

Zero coupon bonds are sold at a price well below face value. Thus, these bonds are appealing to the small investor because they can be bought far more cheaply than ordinary debt obligations. The discount is usually from 50 to 75 percent.


What kind of bond creates volatile liquids?

The nonpolar type of bonding results in more volatile compounds. Ionic and polar type of bondings are favoured in crystallic solids.(These would by hydrogen compounds with some carbon bonds. They can be vaporized before burning to produce some water.)The nonpolar type of bonding results in more volatile compounds. Ionic and polar type of bondings are favoured in crystallic solids.


Which catches fire more quickly petrol or diesel?

petrol has a lower flash point and is more volatile than diesel.


Water has a boiling point of 100 c while sodium chloride has a boiling point of 1465 c. which of the two substances above is more volatile?

Water is more volatile than sodium chloride because it has a lower boiling point. Volatility refers to how easily a substance changes from a liquid to a gas at a lower temperature.


Is benzene or ethyl ether highly volatile?

Ethyl ether is more volatile than benzene. Ethyl ether has a lower boiling point and vapor pressure, making it easier for it to evaporate rapidly. Benzene is less volatile compared to ethyl ether due to its higher boiling point and lower vapor pressure.


Which is more volatile nitrogen oxygen or argon?

Nitrogen and oxygen are more volatile than argon because they are reactive gases that can combine with other elements readily, while argon is an inert gas that is less likely to participate in chemical reactions. Nitrogen and oxygen have lower boiling points and are more likely to evaporate at room temperature compared to argon.


Why 2 Nitrophenol is steam volatile and 4 Nitrophenol is high volatile?

4-nitrophenol has intramolecular (with different molecules) hydrogen bonding and a lot of molecules are held together due to this. and have high volatility. 2-nitrophenol is having intramolecular (within same molecule) hydrogen bonding, which is weak and is stam volatile.