The emerging markets bond, with its risk premium, is up 3.39% and the US Treasury bond fund is up 0.54%.

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Another risk is if an investor buys a premium priced bond and the borrower prepays by refinancing or selling the home then the Note is paid back at par and the investor loses the premium.

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Bonds pay interest based on the expected inflation rate until maturity, plus a fair risk premium over inflation based on the riskiness of the bond.

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