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Since U.S. Treasuries are perceived to be risk-autonomous of charge, they are used as a bellwether for other bonds as well. Corporate and municipal bonds are compared to U.S. Treasuries to assess their risk; when the interest rate between a non-Treasury bond and a Treasury bond is wide (also known as spread), the Treasury bond is considered riskier, and vise versa. However just since the U.S. Treasury is assumed to be default proof, it does not necessarily mean that it is risk autonomous of charge. While default risk is vital to consider, investors must also recognize that bonds exhibit other risks beyond default risk. Below is a list of the different types of bond risks investors should be aware of.
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