Measurement of interest rate risk, Financial Management

Changes in the bond value is inversely related to the change in the interest rates. If an investor holds a long bond position, he would incur loss if the interest rates increase and an investor who holds a short bond position would incur loss if the interest rates decreases. It is very important for a manager to quantify the outcome of a rate change in order to control interest rate risk. To measure interest rate risk exposure properly, a reliable valuation model is to be used. Valuation model helps to accurately determine the value of a position after an adverse rate move. 

Posted Date: 9/10/2012 3:54:05 AM | Location : United States







Related Discussions:- Measurement of interest rate risk, Assignment Help, Ask Question on Measurement of interest rate risk, Get Answer, Expert's Help, Measurement of interest rate risk Discussions

Write discussion on Measurement of interest rate risk
Your posts are moderated
Related Questions
Functional Classification of Mutual Funds Functional classification of Mutual Funds is based on the basic characteristics of the mutual fund schemes for subscription. Mutual Fu

Determine the Amount of financing required   The last factor determining company's cost of funds is the amount of financing required, where cost of capital increases as the fin

Question: (a) What is a computer virus? List and explain the different type of computer viruses? (b) List 4 steps which you can use to minimize the chances of being infec

When an investor buys a bond in between coupon payments, he is supposed to compensate the seller with the coupon interest earned on the bond from the last coupon

State the factors of Small organisations - More creative and dynamic - More flexible to adapt to environmental changes - More informal and small for example some people l

Determination of values The values for which NPV turns into zero are found by calculating the break-even values for the selected variables. Once determined these give an indica

INSTRUCTIONS Download the 2011 Annual Report for Marks and Spencer PLC, from the link provided on Study Space. Review the Annual Report, paying particular attention to the Fin

What can a financial institution Frequently do for a deficit economic unit (DEU) that it would have difficulty doing for itself if the DEU were to deal directly along with an SEU?

What is Planning Internal auditors must plan the audit work so as to perform the audit in an effective manner.There must be sufficient audit programmes in existence which set o

Accounting Rate of Return (ARR): This technique relies on the rate of return every project will earn over its life. It takes the help of accounting profit while calculating the