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The illusion of bond liquidity
The existence of an order book does not mean you can exit a position without losses. Bonds carry market risk: if interest rates in the economy rise, the price of your securities inevitably falls.
Unlike a bank deposit, which is nominally fixed, attempting to sell bonds in an emergency during periods of market turbulence can result in realizing a loss that consumes all accumulated coupon yield for the year. Market liquidity exists, but you often have to pay for it with a discount on the price.
#risks #bonds