Interest rate risk: Difference between revisions

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(IRR).
The risk associated with a change in interest rates.  
The risk associated with a change in interest rates.  


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This may take several forms in the treasury context.
This may take several forms in the treasury context.


For example, and depending on the direction of the change, increasing interest cost, falling interest income, changing market value of debt or of pensions liabilities, differences in competitiveness, or the changing nature of a market when interest rates change.
For example, and depending on the direction of the change:
*Increasing interest cost
*Falling interest income
*Changing market value of debt, or of pension liabilities
*Differences in competitiveness
*The changing nature of a market when interest rates change
*Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.
 
 
Sometimes written 'interest-rate risk'.
 
Not to be confused with Internal Rate of Return, which is also abbreviated to ''IRR''.




== See also ==
== See also ==
* [[Asset-liability management]]
* [[Asset-liability management]]
* [[Cross-currency interest rate swap]]
* [[Double-whammy]]
* [[Double-whammy]]
* [[Duration]]
* [[Exposure]]
* [[Exposure]]
* [[Fair value interest rate risk]]
* [[Financial covenant]]
* [[Forward rate agreement]]
* [[Guide to risk management]]
* [[Guide to risk management]]
* [[Internal rate of return]]
* [[Interest cover]]
* [[Interest rate]]
* [[Interest rate]]
* [[Interest rate cap]]
* [[Interest rate collar]]
* [[Interest rate exposure]]
* [[Interest rate floor]]
* [[Interest rate futures]]
* [[Interest rate gap]]
* [[Interest rate guarantee]]
* [[Interest rate option]]
* [[Interest Rate Risk in the Banking Book]]  (IRRBB)
* [[Interest rate shock]]
* [[Interest rate swap]]
* [[IRHP]]
* [[IRHP]]
* [[IRRBB]]
* [[Matching]]
* [[Matching]]
* [[Pipeline risk]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Portfolio hedging]]
* [[Risk free rate of return]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Shock]]
* [[Shock]]
* [[Time bins]]
* [[Time bins]]
* [[Treasury]]




=== Other resources ===
== Other resource ==


[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]


[[Category:Manage_risks]]
[[Category:Manage_risks]]

Latest revision as of 06:49, 19 March 2024

(IRR).

The risk associated with a change in interest rates.


This may take several forms in the treasury context.

For example, and depending on the direction of the change:

  • Increasing interest cost
  • Falling interest income
  • Changing market value of debt, or of pension liabilities
  • Differences in competitiveness
  • The changing nature of a market when interest rates change
  • Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.


Sometimes written 'interest-rate risk'.

Not to be confused with Internal Rate of Return, which is also abbreviated to IRR.


See also


Other resource

The devil is in the detail, The Treasurer, 2015

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