What is a low rated potentially higher paying bond called Brainly?
Answer: a junk bond is the answer.
Are lower rated higher paying bonds?
Bonds are rated according to their risk of default by independent credit rating agencies such as Moody’s, Standard & Poor’s and Fitch. Those with lower ratings have higher risks associated with them that investors should consider. Due to increased risks, these bonds typically carry higher coupon rates.
Why would investors buy a junk bond?
Junk bonds return higher yields than most other fixed-income debt securities. Junk bonds have the potential of significant price increases should the company’s financial situation improve. Junk bonds serve as a risk indicator of when investors are willing to take on risk or avoid risk in the market.
Which of the following is the market in which money is lent for periods of less than a year?
economics chapter 11
| A | B |
|---|---|
| capital market | market in which money is lent for periods linger than a year |
| money market | market in which money is lent for periods of less than a year |
| primary market | market for selling financial assets that can only be redeemed by the original holder |
| secondary market | market for reselling financial assets |
What type of relationship do risk and return have?
The risk-return tradeoff states the higher the risk, the higher the reward—and vice versa. Using this principle, low levels of uncertainty (risk) are associated with low potential returns and high levels of uncertainty with high potential returns.
What type of relationship does risk and return have quizlet?
The relationship between risk and required rate of return is known as the risk-return relationship. It is a positive relationship because the more risk assumed, the higher the required rate of return most people will demand. Risk aversion explains the positive risk-return relationship.
What is the relationship between risk and return in financial decision making?
The relationship between financial decision making and risk and return is simple. The more risk there is, the more return on the investment is expected. Not all financial managers would view this risk-return trade-off similarly.
What is the relationship of risk and return in investment?
Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.
What is the relationship between expected rate of return and investment risk?
Generally speaking, risk and rate-of-return are directly related. As the risk level of an investment increases, the potential return usually increases as well. The pyramid of investment risk illustrates the risk and return associated with various types of investment options.
Which of the following best describes the risk/return relationship?
mutual fund. Which of the following best defines the risk-return relationship? The principle that says safer investments tend to offer lower returns whereas riskier investments tend to offer higher returns.
What are the five components of the risk factor?
The five main risks that comprise the risk premium are business risk, financial risk, liquidity risk, exchange-rate risk, and country-specific risk. These five risk factors all have the potential to harm returns and, therefore, require that investors are adequately compensated for taking them on.
What is the difference between risk/return and risk profile?
The Risk Profile is designed to determine your level of tolerance to, and acceptance of, investment risk. Investment risk is the chance that the actual value of, or return from, an investment may be less than its expected value or return.
What is a balanced risk profile?
Risk Profile – Balanced Investor A Balanced portfolio looks to invest around 50% in growth assets (eg equities and property) and the remainder in defensive assets (eg cash and fixed income). Such a portfolio is suitable for investors with a medium term investment time frame.
What are the 3 components of risk profile?
Then we’ll explain three components of risk profiling: risk tolerance, risk required, and risk capacity.
Is it better to buy individual stocks or ETFs?
ETFs offer advantages over stocks in two situations. First, when the return from stocks in the sector has a narrow dispersion around the mean, an ETF might be the best choice. Second, if you are unable to gain an advantage through knowledge of the company, an ETF is your best choice.
Can you lose all your money in ETF?
An ETF is just a big box of securities. Leveraged ETFs (which generally contain options or futures) are the ETFs where you can lose a lot of money in a hurry (and with no particular prospect for recovery). Even when there is no crisis or market crash, you could lose half (or all) of your money in a week.
Can a ETF go to zero?
As you can see, ETFs do have the potential to go to zero. However, having an exchange traded fund go to zero is unlikely. Normal ETFs, like the S&P 500, have been around for years. The S&P 500 is seen by many investment professionals as a safe investment.
What ETFs do well in recession?
The Top-Tier
- The Consumer Staples Select Sector SPDR ETF (XLP)
- The iShares US Healthcare Providers (IHF)
- The Vanguard Dividend Appreciation ETF (VIG)
- The Utilities Select Sector SPDR ETF (XLU)
- The Invesco Dynamic Food & Beverage ETF (PBJ)
- The Vanguard Consumer Staples ETF (VDC)
What is the best ETF to buy now?
- Fidelity ZERO Large Cap Index (FNILX) The Fidelity ZERO Large Cap Index mutual fund is part of the investment company’s foray into mutual funds with no expense ratio, thus its ZERO moniker.
- Vanguard S&P 500 ETF (VOO)
- SPDR S&P 500 ETF Trust (SPY)
- iShares Core S&P 500 ETF (IVV)
- Schwab S&P 500 Index Fund (SWPPX)
What is the safest ETF to invest?
Key Takeaways Four ETFs that provide safe options are iShares Short Treasury Bond ETF, BlackRock Short Maturity Bond ETF, SPDR Bloomberg Barclays 1-3 Month T-Bill ETF, and Invesco Ultra Short Duration ETF.