Why is the Dubai Bond’s return independent of the state of the economy? Do Dubai Bonds promise a completely risk-free return?
Dubai Bonds will return the promised 8% regardless of the economy because it had a risk free, 8% return will be constant for all states of the economy.
No, Dubai Bonds do not provide a completely risk-free return, as they are still exposed to inflation. Although, very little unexpected inflation is likely to occur over such a short period of time,
Or, it will not not completely risk free return because the return consists of real risk free rate and inflation, if any state of inflation recorded then the real return will decrease.
Dubai Bonds are risky in terms of reinvestment rate risk.
Dubai Bonds are risk-free in the default sense of the word
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