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Investment in government bonds to achieve high returns
4/12/2016 0:00
[rtl]BAGHDAD / Imad emirate
is the traditional problem when local or foreign investor, especially in the financial market, to find a balance between the rate of return and the degree of risk related to it, as areconstantly researching the means that enable it to maximize the total expected return of the portfolio in light of the degree of risk that is trying to It believed to be appropriate.
There in the bond market, securities are a number of risks to interest rate risk and credit risk and market risk, and liquidity risk, and the risk level of prices.
Economic academic Dr. Emad Mohammed Ali al - Ani confirmed that indirect investments usually heading toward a market characterized by a relatively low degree ofrisk or virtually non - existent, particularly bonds and securities markets.
Risk and investment
noting in an interview for »Sabah»: the rate of return related to the degree of risk towhich investment is closely because they are entering together in evaluating investments, particularly financial market investments, adding that the investment decision is not based on only the expected return, but takes into account the degree of risk and so the extent of their impact in that yield, the rate of return will be measuring the degree of risk that is exposed.
And know the risk, in this aspect, as the possibility of a yield lower than expected, and the more this possibility has increased the likelihood of achieving a low return or loss was a high degree of risk and vice versa.
He said al - Ani: Come degree of risk through a variety of channels and is in two types ,notably the interest rate risk and credit risk rates, saying it became clear risk of interest rates by the change in the level of interest that takes the form distinct in the financial markets, particularly the futures market rates, as it relies in determining prices contracts and the level of deal based on the prevailing interest rates in the market.
On the other hand interest rates are closely linked to prices of securities, particularly bonds Reduced interest rates shows a rise in bond prices.
«Hare Stat}
Ani pointed out that other risk is credit risk arises when one of the contractors can not fulfill the contract on time or delayed payment there 's a potential failure or bankruptcy ofone of the Contracting exporters of debt ( the debtor), and perhaps months , incidents of this kind are occurring in the in 1974 when one of the private banks announced (Hare Stat Bank) in West Germany , went bankrupt during market hours, and became traders call the risk of non - implementation of contracts and settled in a timely manner risk (Hare Stat).
Ani pointed to the existence of market risk where the exercise market very important effects in the work of the companies, including securities issued by companies that prices, explaining: While going through the market cycle recession negatively reflected on corporate profits and the profits of the Securities and opposite occurs when going through the market cycle recovery.
He said the other hand, the market conditions affecting the market , which represents thegeneral trend of prices of securities Price Index and thus the market price index in thestock prices affect, then comes the liquidity risk where there are caused by the inability of customers to pay because of the lack of liquidity resulting from a mismatch risk payment dates and payment dates , or may be derived from non - maximizing cash flow or because of a general lack of market liquidity. Among Ani at the conclusion of his speech the risk level of prices as resulting from the constant change in the price level uncertainty of real income earned from the investment, and lead to the current market value for securities variation for future value, explaining that the uncertainty this represents the degree of risk borne by the investor, on the other hand, this case also shows the lack of investor 's ability to predict the level of interest rates and other risks that may arise.[/rtl]
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