(4).RISK MANAGEMENT.

Risk associated with investing in fixed income securities.

The return obtained from a fixed income security from the day it is purchased to the day it is sold can be divided into two parts,

1. The market value of the security when its even actually sold.
2. the cash flows received from the security over the time period that it is held.Plus any additional income from reinvestment of the cash flow.

several environmental factors effect one or both of these two parts.We can define the risk in any security as a measure of these market factors on the return characteristics of the security.

The different types of risk that in fixed income securities is exposed to are as follows

• Market or Interest-rate risk
• Reinvestment risk
• Timing or Call risk
• Yield-curve maturity risk
• Inflation or Purchasing power risk
• Marketability or Liquidity risk
• Exchange rate or Currency risk
• Volatility risk
• Political or Legal risk
• Event risk
• Sector risk

Each risk is describe in this stay with us.........................................................