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