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.  
 
This may take several forms; increasing interest cost, changing market value of debt or of pensions liabilities, differences in competitiveness, or the changing nature of a market when interest rates change.
 
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 ==
== See also ==
* [[Asset-liability management]]
* [[Asset-liability management]]
* [[Cross-currency interest rate swap]]
* [[Double-whammy]]
* [[Duration]]
* [[Exposure]]
* [[Exposure]]
* [[Fair value interest rate risk]]
* [[Financial covenant]]
* [[Forward rate agreement]]
* [[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]]
* [[Matching]]
* [[Matching]]
* [[Risk free rate of return]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Risk-free rate of return]]
* [[Risk-free rates]]
* [[Shock]]
* [[Time bins]]
* [[Time bins]]
* [[Treasury]]
== Other resource ==
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]


[[Category:Interest_Rate_Risk]]
[[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