If you are concerned that market interest rates may risk in the near and intermediate term,your bond investment strategy should be to

Question

Quizplus · Accepted Answer

When market interest rates are expected to rise, buying bonds with shorter term maturities is the best strategy to minimize interest rate risk. This is because short-term bonds will mature sooner, allowing you to reinvest the money at a higher interest rate once rates have increased. On the other hand, owning long-term bonds would expose you to more interest rate risk and may result in capital losses if rates rise. Buying junk bonds is not a suitable strategy as they carry a higher credit risk and are more likely to default. Exiting bond investments altogether is not recommended as bonds serve as an important diversification tool in a portfolio.

If You Are Concerned That Market Interest Rates May Risk