Credit risk
The issuer may fail to make payments as promised. The probability and consequence of default vary by issuer and instrument.
Higher promised yield can reflect higher perceived credit risk.
Interest-rate and inflation risk
Changes in market yields affect the price of existing fixed-rate bonds. Inflation can also reduce the purchasing power of future payments.
Longer-duration securities are generally more sensitive to changes in yields.
Liquidity and reinvestment risk
Some securities can be difficult to sell quickly at a fair price. Short-term instruments also create the risk that proceeds must later be reinvested at lower rates.
These risks matter even when the issuer ultimately repays in full.
General information only. Investment products can lose value, and terms, fees and regulation can change.