This refers to the analysis of the interest that constitute the assets including loans and bonds as a result of the possibility of a change in the value of the assets which leads to the variability of the interest rates in the market.
Interest rate risk has the potential to affect the product in the market; it is, therefore, to set up a team to determine the risk. The team will work to find out the risk, familiarize with the risk and describe various effects that may affect the organization in the event of interest rate risk.
The identification of the interest rate risk enables the determination of the possibility of risk occurrence and the effects business. The analysis will allow its identification and its ability to affect goals and objectives of an organization.
The magnitude of the interest rate risk is assessed by putting together the consequences and likelihood that it will cause. The evaluation will present an opportunity to make decisions to help manage it before it affects the market activities.
Treating the risk will involve measures in place to mitigate it before it causes an adverse market effect when dong business transactions or trade events.
Reviewing and monitoring risk will be helpful in determining and dealing with uncertainties it is likely to cause. These will lead to improvement of the business enterprise to create more financial opportunities for the trades in the market.
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