Yes, there are four different kinds of risks associated with debt funds. Out of the four, we have discussed the default risk in the second question above. The other three risks are: \ra. Credit Risks: \r\rIf there are certain issues with the financial profile or in the administration of the issuing company which downgrades its credit rating, its NAV also decreases. \rThis is owing to the fact that when the ratings go down, the yield of the bonds go up and the bond price goes south. \rb. Market Risk: \r\rThis is the risk associated with any investment scheme, but with debt fund, the impact of the interest rate change is exponential as discussed above. \rSo, if the market has frequent fluctuation in the interest rate, the debt fund NAV gets affected. \rThe long-term debt funds are highly sensitive to the interest rate changes. \rc. Liquidity Risk: \r\rIf the debt fund becomes unsellable in the market, its liquidity goes down and so does its NAV. \rThis situation can occur from the credit crisis in the economy, decreasing demands for low-rated debt instruments and souring market sentiments.