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Coupon Rate. What it is: How it works Example: Why it Matters: Popular Now.
What is a Small-Cap Stock? Profiting from Options. The Advantage of Tax-Advantaged Funds.
Bond values fluctuate in response to the financial condition of individual issuers, changes in interest rates, and general market and economic conditions. All else held equal, bonds with higher coupon rates are more desirable for investors than those with lower coupon rates. This will alert our moderators to take action Name Reason for reporting: Your Reason has been Reported to the admin. Our in-depth tools give millions of people across the globe highly detailed and thoroughly explained answers to their most important financial questions.
Value Traps vs. What if rates fall? It would be priced at a premium, since it would be carrying a higher interest rate than what was currently available on the market. Of course, many other factors go into determining the attractiveness of a particular bond: But the important thing to remember is that change occurs in market interest rates virtually every day. The movement of bond prices and bond yields is simply a reaction to that change.
The illustration is approximate and is not intended to represent the return of any particular bond or bond fund.
Bond values fluctuate in response to the financial condition of individual issuers, changes in interest rates, and general market and economic conditions. Mutual fund investing involves risks, including the possible loss of principal, and may not be appropriate for all investors.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions.
Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the fund. In general, when interest rates rise, bond values fall and investors may lose principal value.
Interest rate changes and their impact on the fund and its share price can be sudden and unpredictable. Funds that concentrate their investments in a single industry may face increased risk of price fluctuation over more diversified funds due to adverse developments within that industry.
Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. Smaller- and mid-cap stocks tend to be more volatile and less liquid than those of larger companies.
High-yield securities have a greater risk of default and tend to be more volatile than higher-rated debt securities. Consult a fund's prospectus for additional information on these and other risks. This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan.
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