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

Exchange Rate Parity Conditions, 1) According to the IFE (RIP), if U.S. inv...

1) According to the IFE (RIP), if U.S. investors expect a 3% rate of domestic inflation over one year, and a 6% rate of inflation in European countries that use the EUR, and requir

Financial leverage, Financial Leverage In accounting and finance, ...

Financial Leverage In accounting and finance, the amount of long lasting debt that an organization has in relation to its equity the longer the ratio, the larger the lever

Securities and exchange commission of usa, SECURITIES AND EXCHANGE COMMISSI...

SECURITIES AND EXCHANGE COMMISSION OF USA In the United States, securities industry is regulated by the United States Securities and Exchange Commission (SEC). It is the govern

Sensitivity analysis, A division of Saron plc is considering introducing a ...

A division of Saron plc is considering introducing a new product.  The product is the result of work undertaken by the division's research and development department - the expendit

Types of financial statement analysis, Q. Types of financial statement anal...

Q. Types of financial statement analysis? 1) External analysis This analysis is performed by external stakeholders like lenders, suppliers, investors, and governments. 2)

Explain the political risk related with making fdi, What factors would you ...

What factors would you consider in evaluating the political risk related with making FDI in a foreign country? Answer: Factors to be considered as follow: a) The host countr

What is inventory turnover, What is Inventory turnover The shortcoming ...

What is Inventory turnover The shortcoming of this ratio is that average calculation based on beginning and year-end inventory may not represent actual average in year. Other l

What is the modigliani-miller''s irrelevance hypothesis, What is the Modigl...

What is the Modigliani-Miller's irrelevance hypothesis in dividend decision making? Critically evaluate its assumption.

Brief of volatility of interest rate, Historically, three types o...

Historically, three types of shapes have been observed for the yield curve. The relative change in the yield for each treasury maturity is known as a

Procurement, What is the explanation for leaset cost selection

What is the explanation for leaset cost selection

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