What are the risks involved with investing in bonds?
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Risks of Investing in Bonds\nAll investments offer a balance between risk and potential return. The risk is the chance that you will lose some or all the money you invest. The return is the money you stand to make on the investment.\n\nThe balance between risk and return varies by the type of investment, the entity that issues it, the state of the economy and the cycle of the securities markets. As a general rule, to earn the higher returns, you have to take greater risk. Conversely, the least risky investments also have the lowest returns.\n\nThe bond market is no exception to this rule. Bonds in general are considered less risky than stocks for several reasons:\n\nBonds carry the promise of their issuer to return the face value of the security to the holder at maturity; stocks have no such promise from their issuer. \nMost bonds pay investors a fixed rate of interest income that is also backed by a promise from the issuer. Stocks sometimes pay dividends, but their issuer has no obligation to make these payments to shareholders. \nHistorically the bond market has been less vulnerable to price swings or volatility than the stock market. \nThe average returns from bond investments have also been historically lower, if more stable, than average stock market returns.\n\nHigher Risks=Higher Yields\nA specific bond’s risk level is reflected in its yield, another name for return on a bond investment. “Current” yield is a function of the bond’s:\n\nCoupon rate: the annual interest rate the issuer promises to pay the investor, stated as a percentage of the bond’s face value or “par,” which is the amount the investor can expect to have returned on the bond’s maturity date. \nCurrent price, which may be a premium (more than) or discount (less than) in relation to the bond’s face or par value. \nYield-to-maturity reflects the relationship between the total coupon interest payments remaining between now and maturity, and the difference between today’s market value (price) and par value. Yield-to-call is the same calculation based on the total coupon interest payments remaining between now and the first call date (rather than the maturity date) as well as the difference between today’s market value (price) and the call price.\n\nThe higher the risk in a given bond, the higher its yield needs to be to compensate the investor for taking the risk. When the market perceives the yield on a bond to be too low, its price will fall to bring the yield in line with market expectations or prevailing interest rates.\n\nIt’s All Relative to “Riskless” Treasury Yields\nBonds issued by the U.S. Treasury are backed by the full faith and credit of the U.S. government and therefore considered to have no credit risk. The market for U.S. Treasury securities is also the most liquid in the world, meaning there are always investors willing to buy. U.S. Treasury yields will almost always be lower than other bonds with comparable maturities because they have the fewest risks.\n\nRelative yields—which may be discussed in terms of “spread” or difference in yield between a given bond and a “riskless” U.S. Treasury security with comparable maturity—vary with the type of bond, maturity date, the issuer and the economic cycle.\n\nCallable bonds are riskier than non-callable bonds, for example, and therefore offer a higher yield, particularly if the call date is soon and interest rates have declined since the bond was issued, making it more likely to be called.\n\nShort-term bonds with maturities of three years or less will usually have lower yields than long-term bonds with maturities of 10 years or more, which are more susceptible to interest rate risk. All bonds have more risk when interest rates are rising, but those with the lowest coupons stand to lose the most value.\n\nUnderstand the Risks Before You Invest\nBonds have a role to play in virtually every investor’s portfolio (See the article on Asset Allocation for more inf
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They generally should hedge currency risk.  If not, the risk is that gains realized in the foreign currency will be erased by decreases in the value of the foreign currency as measured against your home currency.\n\nThe example on wikipedia is:\nFor example if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change of the Canadian dollar against the U.S. dollar. Suppose that you realized a return in the stocks of 15% but if the Canadian dollar depreciated 15% against the U.S. dollar, you would realize no gain.\n\nAnother possible risk, for importers and exporters, is that currency fluctuations will change the relative prices of foreign and domestic goods, making foreign products more or less attractive.
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Treasury bonds or any other guaranteed government bonds.  \n\nYou are going to find that "safe" investments do not earn a great deal of return.  But remember rule #1..never invest money you can't afford to lose.
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You have riskless securities such as tresury bills. they have a fixed rate of return after a certain time. it is known and fixed.\n\nhowever, if you take stocks for instance, the rate of return will be higher, as there is a risk involved. in the rate of return was not higher, you would never go for a riskier option and stick to the garanteed return.\n\nthe amount of extra return on a risky secutiy is the investors 'premium on risk'. the riskier the investment, the higher the returns
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Stocks mostly yield less than the risk free rate, yet they are a popular investment because their prices can appreciate.  A riskless bond usually has limited or no price appreciation.  the bond will mature on a known date with a known value.  But a stock can rise and rise in value.  You would invest in a stock if you think it is likely to rise over the long term.  \n\nIn your question you actually ask "why would you hold on to it?" implying you already own something with a low yield.  I must admit if I had a bond that had a yield to maturity less than that of a Treasury of the same maturity, I would sell the bond I have and buy the Treasury!
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The U.S. govt sells Treasury Bonds to individuals, mutual funds, foreign governments -- anybody who wants to invest money in a very safe investment at a modest interest rate.  The U.S. has to pay interest to those bond investors in exchange for getting to use their money in its budget.
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There's a website that determines risk of a portfolio.  Its free, you just have to register.\n\nwww.riskgrades.com
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They should.\nBond ladders are a good thing to use when investing in bonds.
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There is risk in any investment no matter which it is, stocks, municipal bonds, gold/silver or what ever. The higher the yield the higher the risk.\n\nNormally if a REIT is handled properly, you have a good REIT manager you will very seldom lose any large amounts of investment. Sometimes they will flatten out or take a dip depending on the interest rate at the time.  You have to make sure they are doing or engaged in what your desires are. Do they invest in development, shopping malls, hotels, strip shopping centers, 2nd trust deeds or what ever is this compatible to the way you want to invest?  What about their last year P&L, Did they offer a prospectus? Who is the manager and how long has he been the manager?\n   \n\nI hope this has been of some use to you, good luck.\n\n"FIGHT ON"
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I assume your refering to a surety bond(there is no reference to an 'obligation' bond) which is a low/no risk fixed income investment.
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There are a lot of variables, but unless they violated the terms of the trust they cannot be held liable.  Also, making reasonable investments (which turn out to fail) doesn't rise to violating investment terms.
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Put it in Mutual funds, if you want a bit of risk...  Otherwise, forget stocks and go with GIC's or bonds...
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It depends what you invest in. US t-bonds will give you about 5%, German bonds 8%, and Brazil 12.5% or so (no capital gains taxes in Brazil either!). Of course, as you can guess, though, the higher the reward, the higher the risk.
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commodity is risky.  \n\ndepending on your investment goals, I would talk to a financial advisor.  Usually your bank will have people you can talk to for free.\n\ngood luck.
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us bonds .. treasurydirect.com\n\nmunicipal and corporates can be bought from any brokerage firm. try vanguard.com first, fidelity.com, schwab.com  and compare offerings.\n\nalso look at municipalbonds.com for accurate pricing info
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Long term debt implies a bond. It is not difficult to value a bond...you'll need the terms of the repayment. (Amount outstanding, nominal interest rate, payment frequency, maturity, rating, etc) and you'll be able (or someone else will) to fairly value the long term debt.
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Most important is probably the S&P/Moody's ranking.  The higher/safer the ranking, the lower the interest rate that it has to pay.  Over time, if the ranking changes, then the value of the bond changes.  Changes can come from the company doing well/poorly over time.\n\nGeneral interest rates also determine the value.