NEW YORK ( TheStreet) -- There are several risks to investing in the bond market. The big risk five years ago was credit risk; the risk that companies would default. Many companies' fortunes have improved since the financial crisis and many analysts believe that risk of default has decreased.Another form of risk to investing in the bond market is interest rate risk which is the consequence of holding longer dated bonds when interest rates move higher. As a rule of thumb the price on a 10 year bond will drop by about 8% for each percentage point that interest rates increase.
New High Yield Bond Fund Hedges Out Interest Rate Risks
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