Investors who purchase bonds because they want the guaranteed interest income will be most concerned with

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	liquidity
B	maturity
C	par value
D	yield

Explanation:

Detailed explanation-1: -Investors buy bonds because: They provide a predictable income stream. Typically, bonds pay interest twice a year. If the bonds are held to maturity, bondholders get back the entire principal, so bonds are a way to preserve capital while investing.

Detailed explanation-2: -Interest rate risk directly affects the values of fixed income securities. Since interest rates and bond prices are inversely related, the risk associated with a rise in interest rates causes bond prices to fall and vice versa. Interest rate risk affects the prices of bonds, and all bondholders face this type of risk.

Detailed explanation-3: -The answer is d. A 10-year bond with a zero-coupon. Interest rate risk refers to the variability of bond prices as a result of changes in interest rates. In general interest rate risk increases with the bond’s time to maturity and decreases with its coupon rate.

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