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Bond Risk

Author: Sophia Media
Video Transcript
Terms to Know
Default Risk

The risk that a bond issuer will default on any type of debt by failing to make payments which it is obligated to make.

Interest Rate Risk

The risk associated with changes in the price of a bond caused by changes in the general interest rate levels in the economy.

Reinvestment Risk

The risk that a bond is repaid early, and an investor has to find a new place to invest with the risk of lower returns.