Interest rate risk in financial management, Financial Management

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Q. Interest Rate Risk in financial management

Interest rate risk is the variation in the single period rates of return caused by the fluctLlaoons in the market interest rate. Mo~ commonly interest rate risk affects the price

Risk and Return Analysis.

Whereat = holding period

It = Bonds coupon interest during period t

Pt = Bonds price at the beginning of holding period P = Change in Bond Price over the period.


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