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Answered 2014-07-02 19:33:27

There are many different interest rate risks to think about when dealing with money. You could potentially pay more than you get.

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Related Questions

How can you estimate interest rate risk?

Interest rate risk is measured by time to maturity and coupon rate

What is the rate of Risk-Free interest?

Risk-free interest is the rate of interest which exists when the expected risk of the economic transaction is zero. In most cases, the general interest rates in major banks of a country reflects the nominal interest rate, which is risk free. The real interest rate is simply the nominal interest rate minus the rate of inflation.

What are the advantages of reinvestment rate risk over interest rate risk?


What is the difference between interest rate risk and reinvestment rate risk?

Reinvestment risk When interest rates are declining, investors have to reinvest their interest income and any return of principal, whether scheduled or unscheduled, at lower prevailing rates.Interest rate risk When interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond's maturity, the greater its interest rate risk.

What is the rate of risk free interest in Kuwait?


What is the interest rate for Lamborghini?

The interest rate will depend on a number of factors. These include who the lender is and also on their perception of your credit risk.

How can interest rate help indicate the health of a countrys economy?

The risk of a nation is based on the interest rate...high rate bad health of country economy, low interest rate better situation

What the interest rate of a Lamborghini's?

The rate will depend on who the lender is and their assessment of the credit risk of the borrower.

Why is a bond with a higher interest rate often considered a higher risk investment?

Bonds with a higher interest rate are often considered a higher risk investment because when interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond's maturity, the greater its interest rate risk.

What is the rate of Risk-Free interest in Malaysia?

About 2.75%

What is the rate of Risk-Free interest in India?


What is Interest rate on mortgage?

It will depend on the lender and the risk of default.

What is the best nominal interest rate?

Nominal interest rate referes to the rate of interest prior to taking inflation into account. Depending on its application, an inflation and risk premium must be added to the real interest rate in order to obtain the best nominal rate.

What is risk free rate of interest in Australia?

It is the current 10 year bond provided by the Federal government, so what ever that rate is, that is the "risk free rate"

Whats the example of price risk?

exchange rate, interest rate, oil price, and inflation risk are all examples of financial risks.

What has the author Robert Edwin Brooks written?

Robert Edwin Brooks has written: 'Interest rate modeling and the risk premiums in interest rate swaps' -- subject(s): Interest rate swaps, Interest rates, Mathematical models

When bonds are issued at a premium what is the affect on interest?

Bonds issued at a premium offer an interest rate that is above the market interest rate. Typically, a bond issuer offers a premium interest rate to offset higher risk associated with a bond offering that has a low credit rating. A purchaser of a bond offered at a premium will receive a higher interest rate but will incur a higher degree of credit risk.

What is the examples of inherent risk?

interest rate and unable to pay repayments

What are the features of adjustable-rate mortgages?

Lenders, buffeted by interest rate risk, looked to shift the risk to the borrower. In exchange, they offered borrowers a lower initial rate

What is the rate of risk free interest in Czech?

The Czech interbank rate as at end Sep 2013 was 0.50%

Firms exposed to the risk of interest rate changes may reduce that risk by?

One way to partially reduce that risk is through interest rate hedging activities in the financial futures market. Hedgingmeans to engage in a transaction that partially or fully reduces a prior risk exposure.

When a bondholder loses money because interest rates in the economy increase it is an example of what kind of risk?

interest rate

What is the rate of Risk-Free interest in Singapore?

At the moment, virtually 0%

What are the advantages to an amortization loan?

The advantages of an amortization loan is that there is much less of a credit risk and there is also much less of an interest rate risk because the loan is paid quicker so there is less effect from the interest rate.

What risks are banks commonly exposed to?

credit risk, interest rate risk, operational risk, liquidity risk, price risk, compliance risk, foreign exchange risk, strategic risk and reputation risk.

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