they’re the average annual return (accounting for gains and losses) realised in a given time period. These returns include the impact of reinvested dividends and interest, but strip out the vanity growth delivered by inflation that does nothing to boost your spending power. ...
Stephen B. Packer
53.One reason why the duration of a portfolio of bonds does not properly reflect that portfolio's yield curve risk is that the duration measure:A: A.assumes all yields change by the same amount.B: B.Assumes all the bonds have the same discount rate.C: C.Ignores differences in coupon ra...
Consider a commercial bank with a portfolio of U.S. Treasury bonds. Why would the bank wish to engage in a swap contract? As the:A. U.S. dollar decreases, the value of the bonds decreases.B. interest rate decrease, the value of the bonds decreases.C. interest rate increases, the val...
Portfolio diversification The Emerging Market bond story stacks up so far. The bonds outperformed Emerging Market equities, on ahistorical risk-adjustedbasis at least. Good portfolio building materials includeasset classesthat add return and reduce overall volatility. ...
*Investing returns are based on our Balanced portfolio and include all fees. Where available, returns data for the selected funds have been used. Where the fund has a shortened performance history, we have used the appropriate index to simulate performance. ...
Building a simple diversified portfolioA basic diversified portfolio could be as simple as holding a broadly diversified index fund such as one based on the Standard & Poor’s 500 index, which owns stakes in hundreds of companies. But you’ll probably want some exposure to bonds as well to ...
will react to the market in varying ways. For example, when the equities market is down, the bond market tends to rise. So, if you balance out your stocks with bonds, those bonds may act as a hedge to help keep your portfolio afloat even if major indices are experiencing abear market...
Likewise, it is logical to borrow to hold a risk-free asset and increase yourportfolio returns, but finding a truly risk-free asset is another matter. Government-backed bonds are presumed to be risk-free, but, in reality, they are not. Securities such asgiltsandU.S. Treasury bondsare free...
Since then, ETFs have expanded to include practically every asset class: stocks, bonds, real estate, commodities, currencies, and international investments, as well as every sector and niche area imaginable.123 The chart below gives a sense of the variety through the market share by the number ...