Fixed-Income Risk Radar
Recall the risk question tied to common fixed-income features.
battlecard Objection: This bond yields more, so it is better. Higher yield means better income. Extra yield may compensate for credit, liquidity, call, or structural risk. Your line Higher yield is where the risk review starts. What risk is the market paying us to carry? Do not treat spread as free income. It reframes yield as compensation and opens the credit-spread conversation. Interest-rate risk versus reinvestment risk Two rate risks, opposite pain points Shortening duration may reduce price risk but can increase reinvestment risk. What risk does a premium callable bond immediately raise? Issuer optionality Call and reinvestment risk. The…
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