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Fixed Income Interview Questions: Educate Yourself

 

What is the importance of fixed income?

Fixed income is an important asset class for investors because it can provide a number of benefits, including:

  • Income: Fixed income investments typically pay a fixed rate of return, which can provide investors with a steady stream of income. This can be especially important for investors who need to generate income in retirement or to meet other financial goals.
  • Diversification: Fixed income can help to diversify an investment portfolio and reduce risk. This is because fixed income investments tend to have low correlation with stocks, which means that they do not move in lockstep with the stock market. This can help to protect your portfolio from losses if the stock market declines.
  • Liquidity: Fixed income investments are typically more liquid than other asset classes, such as real estate or private equity. This means that you can easily sell them if you need cash.
  • Maturity: Fixed income investments have a maturity date, which is the date on which the principal amount is repaid. This gives you a sense of when you will receive your money back, which can be helpful for planning your financial future.
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