Showing posts with label default risk. Show all posts
Showing posts with label default risk. Show all posts

Thursday 22 January 2009

Interest rate risk

Interest rate risk

Interest rate risk is the chance of a loss in portfolio value due to an adverse change in interest rates.

When interest rates change, the value of a fixed income security also changes.

Rising interest rates depress bond prices, and vice versa.

Default risk: Default risk is the same as credit risk. It reflects the fact that a borrower might be unable or unwilling to honour the terms of an agreement to pay principal and interest on a loan.


Also read: Understanding Risk
Partitioning Risk
Business risk
Financial risk
Purchasing power risk
Interest rate risk
Foreign exchange risk
Political risk
Social risk