One of your customers has decided to commit $10,000 to fixed income. She is trying to decide if it makes more sense to invest in

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One of your customers has decided to commit $10,000 to fixed income. She is trying to decide if it makes more sense to invest in

the bonds of a single corporate issuer or to buy an exchange-traded fund (ETF) tracking a corporate bond index. You could explain that the purchase of the ETF results in the greatest reduction of

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1 answer:

yKpoI14uk [10] · Answer 1 · 2023-03-27T07:28:51+03:00

"One of your customers has decided to commit $10,000 to fixed income..."You could explain that the purchase of the ETF results in the greatest reduction of liquidity risk. This is further explained below.

<h3>What is liquidity risk?</h3>

Generally, liquidity risk is simply defined as, to put it another way, liquidity risk is the possibility of experiencing losses as a consequence of not being able to make payments on time or doing so at an unaffordable price.

In conclusion, Fixed-income investments have been made by one of your clients for $10,000..." In other words, you might say buying the ETF lowers liquidity risk the most.