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

Foreign exchange rates, Foreign Exchange Rates The proportional va...

Foreign Exchange Rates The proportional value of one currency to other, used to exchange currency from one denomination to another.  For example, one British pound is wort

Analyse the characteristics of good governance, Question 1: "Good Gover...

Question 1: "Good Governance is an ideal. To ensure sustainable development, actions must be taken to work towards this ideal with the aim of making it a reality." With ref

Marginal weighting system, uses and limitations of the marginal weighting s...

uses and limitations of the marginal weighting system

Definition of budgetary control, DEFINITION OF BUDGETARY CONTROL As pe...

DEFINITION OF BUDGETARY CONTROL As per the ICMA, BUDGETARY CONTROL is the establishment of budgets, relating the tasks of executives to the requirements of a policy, and the c

How does it help financial managers make business decisions, What is the in...

What is the investment opportunity schedule (IOS)?  How does it help financial managers make business decisions? The investment opportunity schedule illustrates graphically pro

Leverage, evaluate the importace of leverage in financial management of a s...

evaluate the importace of leverage in financial management of a small scale company

Balance sheets, Balance Sheets   Peony Ltd. ...

Balance Sheets   Peony Ltd. Aster Ltd. Assets:     Cash $     62,500 $

State the rate of return of a bond - debt securities, Rate of return of a B...

Rate of return of a Bond In case of bonds, rather than dividends, investor is entitled to payments of interest yearly or semi-annually. Investor also benefits if there is an ap

Explain the capital market process, Question 1 State the key functions of ...

Question 1 State the key functions of the financial market. Question 2 Define "Bill of exchange". What are its features? Give different types of cheques. Question 3

Convexity, Duration is good measure while estimating the percentage p...

Duration is good measure while estimating the percentage price change for a small change in interest rates but the estimation becomes inferior with the larger cha

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