Definition for : Interest rate risk

The holder of financial securities is exposed to the Risk of Interest rate fluctuations (when Interest rates fall/rise, the price of a Financial security usually rises/falls). Even if the issuer fulfils his commitments entirely there is still the Risk of a capital loss, or at the very least, an opportunity loss. See also Coupon reinvestment risk.

(See Chapters Chapter 21 Other debt products and Chapter 47 Leveraged buyouts (LBOs) of the Vernimmen)

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