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Daily inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation or deflation on a daily basis. They are thus designed to hedge the inflation risk of a bond. [1] The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780. [2]
If high inflation strikes the American economy, high interest rates are likely to follow. Even though rising interest rates can make all types of financing -- from credit cards to home mortgages to...
Market risk is the risk of losses in positions arising from movements in market variables like prices and volatility. [1] There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most commonly used types of market risk are:
The actual rate that borrowers and lenders receive on the market will depend on (perceived) credit risk, maturity and other factors. For example, a central bank might set a target rate for overnight lending of 4.5%, but rates for (equivalent risk) five-year bonds might be 5%, 4.75%, or, in cases of inverted yield curves , even below the short ...
The four standard market risk factors are equity risk, interest rate risk, currency risk, and commodity risk: Equity risk is the risk that stock prices in general (not related to a particular company or industry) or the implied volatility will change.
Asset price inflation is the economic phenomenon whereby the price of assets rise and become inflated. A common reason for higher asset prices is low interest rates. [1] When interest rates are low, investors and savers cannot make easy returns using low-risk methods such as government bonds or savings accounts.
Monetary inflation is a sustained increase in the money supply of a country (or currency area). Depending on many factors, especially public expectations, the fundamental state and development of the economy, and the transmission mechanism, it is likely to result in price inflation, which is usually just called "inflation", which is a rise in the general level of prices of goods and services.
Target plans to cut prices on thousands of consumer basics this summer, from diapers to milk, as inflation cuts into household budgets and more Americans pay closer attention to their spending.