Interest rate risk is risk to the earnings or market value of a portfolio due to uncertain future interest rates. Discussions of interest rate risk can be confusing because there are two fundamentally different ways of approaching the topic.
Interest rate risk
Interest rate risk is simply the risk to which a portfolio or institution is exposed because future interest rates are uncertain.
interest rate risk
risk that an interest-earning asset, such as a bank loan, will decline in value as interest rates change.
INTEREST RATE RISK (IRR) - The potential that changes in market rates of interest will reduce earnings ...
INTEREST RATE SPREAD - a percent calculated as follows: (dollars of interest earned divided by the doll...
INTEREST RATE RISK - the risk that a savings association's assets and/or liabilities will decline in ma...
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Interest Rate Risk - Risk associated with changes in market interest rates that can harm a financial institution's profitability.
Interest Rate Risk
This is the risk that changes in interest rates will adversely affect the yield or value of a portfolio's investments in debt securities.
International fund ...
Interest rate risk
The risk that a security's value changes due to a change in interest rates. For example, a
bond's price drops as interest rates rise. For a depository institution, also called funding risk, the risk that ...
Interest rate risk: Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV.
Interest Rate Risk: Is the uncertainty in the direction of interest rates. Changers in interest rates could lead to capital loss, or a yield less than that available to other investors. Putting at risk the earning capacity of capital.
Interest Rate Risk
The prospect that Treasury and agency securities will decline in price if economy-wide interest rates rise.
Interest Rate Swap Points ...
Interest rate risk
The risk borne by fixed interest securities, and by borrowers with floating rate loans, when interest rates fluctuate. When interest rates rise, the market value of fixed interest securities declines and vice versa.
Interest Rate Risk Bond prices and some common stock prices can rise of fall because of changes in interest rates. When interest rates rise, bond prices fall. Conversely, when interest rates fall, bond prices rise.
Interest Rate Risk
The potential for gains or losses resulting from fluctuations in the market price of fixed-income securities (debt or preferred shares). Such price fluctuations are a consequence of changes in prevailing interest rate levels.
INTEREST RATE RISK " The risk that should interest rates rise, an investment in a fixed income security will decrease in value. This will cause a decrease in the overall return which the investor receives as it relates to newly issued securities.
INTEREST RATE RISK: The variability in a security's returns resulting from changes in interest rates.
Interest rate risk premium
The rate premium above the rate on the least risky or "prime" loan. See Why the System is Vulnerable to Crisis.
Interim refinance ...
interest rate risk: A risk assumed by bond investors that interest rates will rise.
interest rate swap: An arrangement to swap a fixed loan rate for a floating loan rate, or vice versa.
Interest Rate Risk
Key Concepts
Interest rate risk represents the extent to which an asset or investment's value could be influenced by movements in variable interest rates.
Interest Rate Risk: The risk that, as interest rates rise, the value of already-issued bonds will fall, resulting in a loss if they are sold before maturity.
Interest Rate Risk: The impact on project cash flow from higher than expected interest costs..
Intermediary: An entity standing between parties to a funding, financing, or swap agreement. An intermediary may be a risk.
Interest Rate Risk
Internal Rate of Return - IRR
Market RRR (required rate of return) Schedule
Modified Internal Rate of Return - MIRR
Present Value - PV ...
Interest rate risk Â- Currency risk Â- Equity risk Â- Commodity risk Â- Volatility risk
Liquidity risk
Refinancing risk ...
Interest rate risk For a bond, the risk that a rise in rates will decrease the bond's price. For a depository institution, also called funding risk, the risk that income will suffer because of a change in interest rates.
Interest rate risk is also present inside the trusts themselves on their balance sheets since many trusts hold very long term capital assets (pipelines, power plants, etc.), ...
Interest Rate Risk - Is the risk associated with changes in general interest rate levels or yield curves. This compares to Prepayment Risk.
Interest Rate Risk
The risk that the net market value of a security or a portfolio will decrease and/or, with respect to an FI, the risk that its net income will be adversely affected due to changes in interest rates
Interest Rate Swap ...
Related: interest rate risk
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
trust operations. It is earnings with depreciation and amortization added back. A similar term increasingly ...
Managing Interest Rate Risk
Different Needs, Different Loans
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An indicator of interest rate risk. In general, the higher the concentration of longer-maturity issues, the more a portfolio's share price will fluctuate in response to changes in interest rates.
Distribution period ...
Inflation risk and interest rate risk are closely tied, as interest rates generally rise with inflation. Because of this, inflation risk can also reduce the value of your investments.
Because the interest rate paid by the borrower fluctuates with the general level of interest rates in the marketplace, ARMs shift most of the interest rate risk from the lender to the borrower.
immunization The protection against interest rate risk by holding assets and liabilities of equal durations. impaired capital The situation in which the par value of a firm's stock exceeds the firm's total capital.
Interest Rate Risk - The possibility that bond prices overall will decline over short or even extended periods due to rising interest rates.
interest rate risk The degree of uncertainty in the prices of securities associated with changes in interest rates; the value of the securities moves in an inverse relation to interest rates.
REINVESTMENT RISK See interest rate risk. REIT See Real Estate Investment Trust. RENEWAL COMMISSIONS The commission payments made to insurance agents that are based on the premium payments made after the policy's first year.
These securities, also termed 'Indexed Bonds', were introduced to offer investors protection from INFLATION and INTEREST RATE RISK that are inherent in a DEBENTURE or BOND bearing a fixed coupon.
LADDER A fixed income investment strategy that seeks to reduce interest rate risk by investing in fixed income securities with a wide variety of maturities.
Adjustable rates work to transfer part of the interest rate risk from a lender to a borrower. A borrower benefits when interest rates fall and pays a price when interest rates rise.
Distribution By Maturity definition :
An indicator of interest rate risk. In general, the higher the concentration oflonger-maturity issues, the more a portfolio's share price will fluctuate in response to changes ininterest rates.
This is because the borrower assumes the interest rate risk in exchange for paying a lower loan rate. The borrower is betting the interest rates won't go up and if they do, it won't by a substantial amount.
A method involving purchase of several investments, each with a different maturity date, to reduce inflation, interest rate risk and default risk for fixed income investment.
Law of Demand/Supply: ...
The chance there will be unexpected changes in a financial price, including currency (foreign exchange) risk, interest rate risk, and commodity price risk.
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Personal Finance Glossary ...
Treasury issues are non-callable. This is an advantage to the lender since there is no interest rate risk. With callable bonds, there is the risk of having to reinvest before maturity at a potentially lower interest rate.
Interest rate risk
Interest rate swap
Intermarket sector spread
Intermarket spread swaps
Internal market
Internal rate of return
Internally efficient market
International Depositary Receipt (IDR)
International market ...
The chance that a security's value will decline due to a general decline in the market. With fixed income securities, market risk is closely tied to interest rate risk. As interest rates rise, fixed income prices decline, and vice versa.
Risk has no one definition, but some theorists, notably Ron Dembo, have defined quite general methods to assess risk as an expected after-the-fact level of regret. Such methods have been uniquely successful in limiting interest rate risk in financial ...
A strategy in which a bond portfolio is constructed to have approximately equal amounts invested in each maturity within a given range, to reduce interest rate risk.
Lagging indicator: ...
Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those that owe money to the bank will not repay), and interest rate risk (the risk that the bank will become ...
Financial price risk
The chance there will be unexpected changes in a financial price, including currency (foreign exchange) risk, interest rate risk, and commodity price risk.
For example, market risk refers to the volatility in stock prices; currency risk refers to the impact a rising or falling currency might have on an investment; and interest rate risk is the risk associated with the rise or fall in interest rates.
Convertible Arbitrage
In the context of hedge funds, a style of management that involves the simultaneous purchase of a convertible bond and the short sale of shares of the underlying stock. Interest rate risk may or may not be hedged.
acquires the right to purchase a particular amount of that currency by a specific date at a fixed exchange rate. These contracts are traded on exchanges throughout the world. Often used as a hedging mechanism to offset currency or interest rate risk.
 See also: Banks, Expense, Funding, Depository institution, Financial risk
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