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What is Interest Rate Risk? John Spacey, October 16, 2015 updated on March 20, 2021
1. Asset PricesThe Canadian government suddenly increases interest rates in response to unexpectedly high inflation. The corresponding increased rates for new mortgages make houses less affordable. Buyers leave the market and some homeowners with floating rate mortgages decide to sell as their monthly payments increase. The average selling price for real estate declines across all major Canadian cities resulting in losses for real estate investors.2. Business CostsA European shipping company that operates on thin margins has large financing needs for its fleet of ships. Interest rates suddenly increase just as the company must refinance some its largest vessels. The increased cost of the new financing terms make the company unprofitable and its stock declines.RiskThis is the complete list of articles we have written about risk.If you enjoyed this page, please consider bookmarking Simplicable.
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A metric for measuring risk management.
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Any risk that people have a strong aversion too.
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How to calculate relative risk with examples.
Investing RiskA list of common investment risks.Risk Opposite
The true opposites of risk.
Smart Money
The definition of smart money with examples.
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A few definitions of recession.
Risk Meaning
The meaning of risk with examples.
Good Risk Examples
An overview of good risk with examples.
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