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Here’s a look at the pros and cons of bond funds in a lower interest rate environment. Pros. Rise in bond prices: When rates fall, the prices of bonds held by the bond fund go up. This is ...
Small- and medium-cap stocks carry more risk, but may provide higher returns. Money market mutual funds offer even more security, albeit at the expense of lower returns. Automatically Reinvest ...
Bond index funds invest in a selection of bonds intended to reflect the performance of a particular index. They can provide investors with a window to diversified, low-fee investing. However, bond ...
What are the pros and cons of zero-coupon bonds? A bond that doesn’t pay interest might seem a little paradoxical compared to the typical expectation of investing in bonds, but there might be a ...
By comparison the underlying index for a cap is frequently a LIBOR rate, or a national interest rate. [1] The extent of the cap is known as its notional profile and can change over the lifetime of a cap, for example, to reflect amounts borrowed under an amortizing loan. [1] The purchase price of a cap is a one-off cost and is known as the ...
Small Cap vs. Large Cap: Some investors use the size of a company as the basis for investing. Studies of stock returns going back to 1925 [ citation needed ] have suggested that "smaller is better," and on average, the highest returns have come from stocks with the lowest market capitalization , the so-called " Size premium ".
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In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for the increased risk.