Intressimääririskiä

Intressimääririskiä, or interest rate risk, refers to the potential for a decline in the value of an investment or financial instrument due to changes in interest rates. This risk is particularly relevant for fixed-income securities like bonds, where the coupon payments are fixed. When market interest rates rise, newly issued bonds offer higher yields, making older bonds with lower fixed coupon rates less attractive. Consequently, the market price of these older bonds falls to compensate for the lower yield. Conversely, if market interest rates fall, existing bonds with higher coupon rates become more desirable, and their prices tend to rise.

Financial institutions, such as banks, are significantly exposed to interest rate risk. They typically borrow money at short-term interest rates and lend it out at long-term interest rates. If short-term rates rise faster than long-term rates, their net interest margin, the difference between interest income and interest expense, can shrink, impacting profitability. Similarly, if long-term rates fall, the value of their long-term assets may decrease.

Managing interest rate risk involves various strategies. For investors, this can include diversifying their bond portfolio across different maturities and coupon rates, or investing in floating-rate securities whose coupon payments adjust with market rates. For financial institutions, hedging instruments like interest rate swaps, futures, and options are commonly used to mitigate potential losses arising from adverse interest rate movements. The overall goal of managing interest rate risk is to protect the value of assets and ensure stable earnings in the face of fluctuating interest rate environments.