Purchase Solution

Two risk components of interest rate risk

Not what you're looking for?

Ask Custom Question

What are the two risk components of interest rate risk? Relative to them, what are the implications of holding a bond to its duration versus holding the bond to maturity? (Be careful to explain the relation of Duration to Interest Rate Risk.)

Purchase this Solution

Solution Summary

This solution provides details on the two risk components of interest rate risk. The expert briefly explains the implications of holding a bond to its duration versus holding the bond to maturity.

Solution Preview

Hello,

The two components of interest rate risk are the term structure risk (aka options or repricing risk) and the volatility risk.

The term structure risk is risk from changes in the fixed income term structure. It arises if interest rates are fixed on liabilities for periods that differ from ...

Purchase this Solution


Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.