Interest rate risk, Financial Management

Assignment Help:

Bonds are usually recognized by yields, which change from time to time owing to many market forces. There exists an inverse relationship between the bond price and the interest rates. When the interest rates rise, the bond's price decline; and when interest rates decrease, the bond's price increase. As the price of the bond fluctuates with market interest rates, an investor is exposed to a risk because the price of a bond held in his portfolio will decline if market interest rates rise. This risk is called interest rate risk. 


Related Discussions:- Interest rate risk

Irregular variation in time series analysis, Irregular Variation As the...

Irregular Variation As the name suggests, the movement of the variable is random in nature without consistency and therefore, highly unpredictable. Since this type of irregular

Define the p/e valuation method, Define the P/E valuation method. Under wha...

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio specifies how much investors are willing to pay for each dol

Incorporation of the risk in investment proposal, Q. Incorporation of the R...

Q. Incorporation of the Risk in Investment Proposal? Incorporation of the Risk in Investment Proposal: - As stated previous risk is involved in every capital budgeting decision

Define why it is difficult to forecast future exchange rates, Researchers f...

Researchers found that it is extremely difficult to forecast the future exchange rates more precisely than the forward exchange rate or the current spot exchange rate. How would yo

What do you signify by cash, Q. What do you signify by Cash? Cash :- Fo...

Q. What do you signify by Cash? Cash :- For the motive of cash management the term cash not only includes cheques, bank drafts, coins, currency, notes, demand deposits with ban

Working capital turnover, Definition of 'Working Capital Turnover': A ...

Definition of 'Working Capital Turnover': A calculation comparing the depletion of working capital to the generation of sales over a provided period. This provides some useful

Leverage, what is the meaning of market feasibility? What are its different...

what is the meaning of market feasibility? What are its different types with their degree?

China emerged as second most significant recipient of fdi, How would you de...

How would you describe the fact that China emerged as the second most significant recipient of FDI after the United States in recent years? Answer: China attracted a large deal o

Explain compound value concept, Q. Explain Compound Value Concept? The ...

Q. Explain Compound Value Concept? The Compound Value Concept is used to find out the FV of present money. It is the same as the concept of compound interest, wherein the inter

Price supports or acreage limitation programs cost society, Suppose the gov...

Suppose the government wants to increase farmers’ incomes.  Why do price supports or acreage limitation programs cost society more than simply giving farmers money? Price acrea

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd