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Let us look at Bonds
Let us look at a case study of the bond instrument.
In the case study here, for example:
If the investor has bought the bond or has given $1000 to the corporation or government, let us calculate the interest the investor will receive.
Bonds are naturally known to be safe. However, you should understand that the more the interest rates, the higher the risks of the bond. As a trader, we should always cover our risk by predefining our downside. The upside will always look after itself. More on the Risk management will be covered in the later modules.
This case study will give you a good understanding of the different terminologies that we use and how it applies to a bond example.