Concept
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Generally, the function that a bond serves for the bond-holder is that it enables them to collect frequent payments, in the form of interest. If these payments are missed or neglected by the issuer, the investor will incur a loss. This is known as issuer, credit or default risk.
Bonds operate in an interest rate environment. When interest rates rise, the value of a bond decreases. An investor who holds bonds in an interest rate hiking cycle may be exposed to loss. This is known as interest rate risk