occasion risk in fixed income securities

 Any investment strategy will have some level of risk associated with it. However, the greater the amount of risk an investment strategy carries, the more it generally costs. For example, buying stocks that are considered to be relatively safe investments such as companies with strong earnings and several shareholders will generally carry lower levels of risk than buying stocks of companies that are considered to have a high degree of volatility. Even within a single market such as the United States, there are different types of investments that carry varying levels of risk.

The economy has been on an upswing for months now, but some investors still worry that a potential recession could derail the recovery. One of the biggest risks to the economy is the possibility of a severe downturn in the credit market. If credit markets seize up, it will be difficult for businesses and consumers to obtain loans and credit, which could lead to a recession. However, the U.S. government has taken steps to ensure that the credit markets do not seize up.

Occasion risk is the risk that fixed income security will lose value when the price of the underlying asset rises. This is generally caused by a rise in interest rates, which makes fixed-income securities more expensive to investors. When occasion risk becomes a concern, investors will often sell their fixed income securities and purchase higher-yielding securities. This is called a flight to quality.

One of the most important risks facing investors today is the increased volatility in fixed-income securities. When the market was at its strongest, investors had little need to worry about interest rates and other traditional risks in fixed income. But now, with the market experiencing its most volatile stretch in decades and interest rates at historic lows, investors are finding themselves needing to adjust their exposure to fixed income. Occasion

Occasion risk is the risk that fixed-income security will lose value when interest rates rise. In a rising rate environment, occasion risk increases the price of fixed-income securities, such as Treasury bonds, which reduces their yield and makes them less attractive to investors. This can hurt the economy and the stock market as a whole. Even though occasion risk is a well-known risk in fixed-income markets, it still has an impact on the way investors approach these markets.