Interest rate risk

• The chance that interest rates will change and thereby change the required return and bond value. Rising rates, which result in decreasing bond values, are of greatest concern.

• The risk that a security's value changes due to a change in interest rates. For example, a bond's price drops as interest rates rise. For a depository institution, also called funding risk, the risk that spread income will suffer because of a change in interest rates.

• The risk of changes in value due to changes in interest rate is called interest rate risk. Long lived assets lose more of their value when interest rates rise than short lived assets. If a bank has more long-lived assets than liabilities, then the bank worries about interest rate increases.

• Is the risk associated with changes in general interest rate levels or yield curves. This compares to Prepayment Risk.


Follow this link for all the terms related to interestraterisk.

 Embedded terms in definition
Bond value
Funding risk
Interest rate
Prepayment risk
Rate risk
Required return
Spread income
Yield curve
 Related Terms
Accrued interest
Add on rate
Adjustable rate mortgage
Adjustable rate or floating rate preferred share arps
Adjustable rate preferred stock
Affiliate risk
After tax real rate of return
All current rate method
All equity rate
Amortizing interest rate swap
Annual percentage rate
Annuity rate
Arithmetic average mean rate of return
Auction rate preferred stock
Average rate of return
Average tax rate
Back discount rate
Bank rate
Bankruptcy risk
Base interest rate
Base rate
Basis risk
Benchmark interest rate
Break even payment rate
Break even tax rate
Broker loan rate
Business and industry risk
Business risk
Call money rate
Call risk
Capitalization rate
Capitalized interest
Cash flow after interest and taxes
Ccpc rate reduction
Commercial risk
Company specific risk
Completion risk
Compound annual growth rate
Compound interest
Compounded interest
Counterparty risk
Country economic risk
Country financial risk
Country risk
Country risk analysis models
Coupon rate
Covered interest arbitrage
Credit risk
Crediting rate
Cross border risk
Cross over rate
Crossover rate
Currency risk
Currency risk sharing
Current rate method
Default risk
Discount rate
Diversifiable risk
Dividend rate
Dollar weighted rate of return
Earnings before interest and taxes
Economic risk
Effective annual interest rate
Effective interest rate international context
Effective rate
Effective true annual rate
Equilibrium market price of risk
Equilibrium rate of interest
Event risk
Exchange rate
Exchange rate mechanism
Exchange rate risk
Exchange rate risk capital budgeting
Exchange risk
Fallout risk
Federal funds rate
Financial risk
Firm specific risk
Fixed exchange rate
Fixed rate loan
Fixed rate payer
Flat price risk
Floating exchange rate
Floating rate
Floating rate bonds
Floating rate contract
Floating rate loan
Floating rate note
Floating rate payer
Floating rate preferred
Floating rate preferreds
Floor rate
Force majeure risk
Forecasting risk
Foreign exchange fx risk
Foreign exchange rate
Foreign exchange risk
Forward exchange rate
Forward interest rate
Forward rate
Forward rate agreement
Funding risk
Future value interest factor
Future value interest factor for an annuity
Geographic risk
Gross interest
Growth rate
Guaranteed investment interest contract
Herstatt risk
Historical exchange rate
Hurdle rate
Idiosyncratic risk
Implied repo rate
Incremental internal rate of return
Indication of interest
Inflation risk
Insolvency risk
Interest calculations and related formulas
Interest compounded annually
Interest compounded continuously
Interest coverage
Interest coverage ratio
Interest coverage test
Interest discounted annually present value of reversion
Interest discounted continuously
Interest equalization tax
Interest equivalent factor
Interest impact on accumulation of 1 per period
Interest impact on instalment to amortize or amortization
Interest impact on present value of ordinary annuity of 1 per period
Interest impact on sinking fund factor
Interest on interest
Interest only
Interest only strip
Interest payments
Interest rate
Interest rate agreement
Interest rate buydowns
Interest rate cap
Interest rate ceiling
Interest rate exposure
Interest rate floor
Interest rate on debt
Interest rate parity theorem
Interest rate risk management
Interest rate swap
Interest subsidy
Interest tax shield
Internal growth rate
Internal rate of return
Internal rate of return approach
Internal rate of return irr
Inverse floating rate note
Lease rate
Liquidity risk
London interbank offered rate libor
Macro political risk
Marginal tax rate
Market capitalization rate
Market price of risk
Market risk
Market risk return function
Micro political risk
Minority interest
Money rate of return
Mortality risk
Mortgage pipeline risk
Mortgage rate
Net interest margin
Nominal annual rate
Nominal exchange rate
Nominal interest rate
Nominal interest rate international context
Nominal rate of interest
Nondiversifiable risk
Nonsystematic risk
Open interest
Operating risk
Operational risk
Outright rate
Overnight delivery risk
Overnight rate
Pass through coupon rate
Pass through rate
Pibor paris interbank offer rate
Pin risk
Plowback rate
Political risk
Portfolio internal rate of return
Portfolio turnover rate
Prepayment risk
Present value interest factor
Present value interest factor for an annuity
Price risk
Prime rate
Product risk
Purchasing power risk
Rate anticipation swaps
Rate lock
Rate of interest
Rate of return
Rate of return ratios
Rate risk
Rate sensitive assets
Rate sensitive liabilities
Real interest rate
Real rate of interest
Real rate of return
Reference rate
Regulatory pricing risk
Reinvestment rate
Reinvestment risk
Residual risk
Retention rate
Reverse price risk
Risk adjusted discount rate
Risk adjusted profitability
Risk adjusted return
Risk arbitrage
Risk arrays
Risk averse
Risk capital budgeting
Risk classes
Risk controlled arbitrage
Risk free asset
Risk free rate
Risk indexes
Risk indifferent
Risk lover
Risk management
Risk management document
Risk neutral
Risk of technical insolvency
Risk premium
Risk premium approach
Risk prone
Risk return tradeoff
Risk reversal
Risk seeking
Risk transformation
Risk types
Riskless or risk free asset
Riskless rate
Settlement rate
Settlement risk
Short interest
Shortfall risk
Simple interest
Sovereign risk
Specific risk
Split rate tax system
Spot exchange rate
Spot interest rate
Spot rate
Spot rate curve
Stated annual interest rate
Stopping curve refunding rate
Sustainable growth rate
Swap interest rate
Swap rate
Systematic risk
Systematic risk principle
Term structure of interest rates
Term structure of interest rates and volatility
Theoretical spot rate curve
Theta risk
Time weighted rate of return
Times interest covered
Times interest earned ratio
Total rate of return
Total risk
True interest cost
Undiversifiable risk
Unemployment rate
Unique risk
Unisex annuity rate
Unsystematic risk
Value at risk
Value at risk model
Variable rate cds
Variable rate loan
Vega risk
Volatility risk

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