Income risk

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Income risk

The possibility that a portfolio's dividends will decline as a result of falling interest rates. Income risk is generally greatest for money market instruments and short-term bonds, and least for long-term bonds.

Income Risk

The risk that the yield of a fund investing in short-term debt securities will decrease because of a decline in interest rates. For example, suppose a mutual fund invests in money market securities with maturities of less than a year. If interest rates decline, then the yield on the money market fund will also decline because when the money market securities mature, the returns are reinvested at lower interest rates. Income risk is the same concept as interest rate risk, but the former applies to funds, while the latter pertains to individual debt securities.
References in periodicals archive ?
The BPV High Quality Short Duration Income Fund seeks stable income and low volatility by attempting to mitigate typical fixed income risks.
Investment in the Fund is subject to investment risks, including, without limitation, management style risk, market risk, income risk, mortgage-backed securities risks, fixed income risk, credit risk, interest rate risk, maturity risk, yield curve risk, prepayment risk, liquidity risk, U.
Large income risks require large interest on investements, increase finance costs and thus reduce the competitiveness of an industry.
The goal of this study is to examine 1) to what extent input and output price volatility contributes to revenue and income risks in the pig and poultry sector, 2) how effectively revenue and income insurance can reduce fluctuations in prices and revenues, 3) how animal disease insurance or fund differentiated based on farm-specific risk could be operationalized to fund animal disease damages and to reduce income volatility in the Finnish pig and poultry sector, and 4) what kind of problems income and revenue insurance could face (e.
However, labor income risks generate precautionary savings that force the rate of return on capital below this rate.
Fourth, the implications of taxation regime depend, in some cases strongly, on the level of income risk faced by households.
Additionally, income risk matters for the way in which households respond to pure consumption taxes.
Vollmer completely ignored actual market conditions or future income risks, particularly as to tax escalation income projections, and relied entirely on the mathematics of capitalization of the reported income in each year as if in a vacuum," the Judge writes on page 33 of the 34-page decision.
People could use macro markets to hedge their own national income risks and to invest in the rest of the world.
For the world's poorest countries, hedging national income risks may truly be a matter of life and death for some citizens.
With the new cash allocations on the horizon and technicals in most spread sectors strongly positive, he thinks fixed income risks assets will continue their performance for the rest of 2012 into January.
The Fund is subject to the market risks, credit risks, and income risks which generally are affected by changes in interest rates and credit qualities.