interest rate risk
Bond price sensitivity
Interest rate risk is the possibility that changes in interest rates will negatively affect the value of an investment or loan.
Bond prices fall when interest rates rise, so bondholders face interest rate risk.
Banks face it when the rates they pay on deposits rise faster than what they earn on loans.
The fund's long-duration bonds carry significant interest rate risk.
- hedgingNoncommittal maneuvering
- loansBorrowed money arrangements
- mortgagesLoans secured by property
- bondsTies that unite
- inflationSustained price level increase
monetary policy · stress testing · credit markets · yield curve · basis point · duration · derivatives · gap analysis · recession · certificates of deposit · corporate debt · swaps · LIBOR · diversification · consumer spending · cash flow · economic growth
interest rate riskcredit risk
Potential for borrower nonpayment
market risk · inflation risk · political risk · exchange rate risk
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