The Least Risky Type Of Corporate Bond Is A  

       Whenever you decide to invest in corporate bonds, there is certain risk associated with the investment. There is a possibility that you might lose a part of the invested money or the entire amount. However, the equation between risk and return depends on the type of corporate bond you invest in, the issuing company, and the state of the economy.

      You have to remember the higher interest you get on a corporate bond, the greater is the risk. The least risky type of corporate bond also offers lower returns. This is the law governing corporate bond investing.

     The least risky type of corporate bond is one that promises to return the face value of the investment at maturity. The corporate bond that offers to pay fixed rate of interest is also considered as the least risky type of corporate bond.

     It has also been seen that corporate bonds that are callable are riskier than non-callable bonds. That would explain why callable corporate bonds offer higher yield. It has been seen that if interest rates have declined since the bond was issued, callable bonds are likely to be called and you will get lower money than your expectations because of the decline.

     Another way of determining which corporate bond is least risky would be to study the credit ratings of different bonds thoroughly before investing money. Credit agencies rate bonds based on the issuing company’s financial status and its previous record of repaying past debts. Taking note of credit ratings of different bonds will give you idea as to which bond is more likely to pay back your principal along with interest.  

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The Least Risky Type Of Corporate Bond Is A

 

 

    
 

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