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
formula and explanation for Gordon''s dividend capitalization method

The total return in case of mortgage-backed and asset-backed securities depend on the projected principal repayment and the interest earned on r

Q. Explain about economic order quantity? The economic order quantity (EOQ) model is basis on a cost function for holding inventory which has two terms: holding costs as well a

Q. Example on Bills of exchange? ARG Co will be apprehensive to protect the sterling value of its expected dollar receipt. The quoted forward rates demonstrate that the dollar

explain for factors influencing design for dividend policies

State the Disadvantages of ias 14 risk and return approach Segments may include operations with different risk and returns. Difficulty in defining segments, which mak

Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a

A 16% debenture of R5 000 is redeemable at a premium of 10% after 5 years. The fair rate of return on similar debentures is 14% before tax. Calculate the present value of the capit

Q. Explain about Centralised treasury function? Treasury departments are usually a feature of larger companies than Frantic although it is perhaps beneficial to consider the be

Question: a. Explain what the debt overhang problem is (following the lines of Myers 1977) make sure that you specify what the relevant conflict of interest is and what are the