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decca
Apprentice
Joined: 11 Oct 2006
Posts: 2
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 Posted: 05/11/08 - 09:22 Post subject: |
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| I know that I can’t avoid interest rate risk. I just want to know is there any way how can I reduce it? It is well known that when interest rates rise, the values of outstanding bonds will fall. For example, a bond's price goes down as interest rates go up. I am certain; there must be some way how can interest rate risk be reduced. |
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marleen
Apprentice
Joined: 04 May 2005
Posts: 2
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| Posted: 06/09/08 - 23:19 Post subject: |
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| Hi there. Maybe I can help? Risk Management Specialists are part of bank offices and they can help in detecting financial products which may help reduce interest rate risk. One of the products is fixed rates on for example, five years term. The other thing you can do, is to pay a premium and give the borrower maximum cost of borrowing. I read in one Economic magazine that there are four basic options for reducing the amount of interest rate risk: selling assets, extending liabilities, off balance sheet hedging and retaining the status quo. |
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mathew41040
Apprentice
Joined: 11 Jun 2008
Posts: 9
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| Posted: 06/14/08 - 05:05 Post subject: |
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| marleen wrote: | | Hi there. Maybe I can help? Risk Management Specialists are part of bank offices and they can help in detecting financial products which may help reduce interest rate risk. One of the products is fixed rates on for example, five years term. The other thing you can do, is to pay a premium and give the borrower maximum cost of borrowing. I read in one Economic magazine that there are four basic options for reducing the amount of interest rate risk: selling assets, extending liabilities, off balance sheet hedging and retaining the status quo. |
I totally agreed to marleen. |
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