A bond is not a deposit
A bond is a security that represents the debt of a state or company. Although it is sometimes considered more solid than stocks, its price can go up and down, especially when interest rates in the economy change.
When interest rates rise, existing bonds with lower interest rates may fall in price. When interest rates fall, existing bonds may benefit from an increase in price. Therefore, a bond track can also be volatile.
What are VAT and credit risk
MAH is an index that expresses the average duration of the bond flows. The longer the interest rate, the higher the sensitivity to interest rate changes.
Credit risk is the risk that the borrower will not meet his obligations. A government bond and a small company bond are not the same thing, so it is important to understand what type of bond is in the pipeline.
How to assess a bond investment track
Check whether the track is governmental, corporate or combined, what is the level of dispersion, what is the exposure abroad and what is the investment policy. A conservative name does not always mean no volatility.
For those who need money in the short term, even moderate volatility can be significant. Therefore, adjusting the track should take into account the horizon, the interest rate and the ability to absorb price changes.