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What is Interest Rate Risk? John Spacey, 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.
Business RisksA list of common business risks.Risk TreatmentThe four things that can be done about risk.Risk Management Effectiveness
A metric for measuring risk management.
Positive RiskThe potential that you'll achieve too much of a good thing.Dread Risk
Any risk that people have a strong aversion too.
Risk TakingThe definition of risk taking with examples.Risk ExamplesA list of risk examples by type.Risk Probability vs Risk ImpactThe two main factors in modeling a risk.Calculated RiskA definition of calculated risk with an example.Relative Risk
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.
Investing StrategyA list of investing strategies in the real world.Recession Definition
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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