Listed below are the five major risks faced by bond investors. For each risk: a. give a definition o

Listed below are the five major risks faced by bond investors. For each risk:

a. give a definition of the nature of risk
b. create a specific example of a situation that involves that risk
c. discuss how that risk is quantified
d, discuss how that risk can be reduced or eliminated

The risks that you should consider are as follows:
1. Credit Risk
2. Interest Rate Risk
3. Pre-Payment Risk
4. Optionality Risk
5. Inflation Risk

 

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