B. Interest Rate Risk

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Last updated 1:17 PM on 6/29/26
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4 Terms

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  1. Interest Rate Risk

  2. Maturity Risk Premium (MRP)

  3. Reinvestment Rate Risk

3 Types of Interest Rate Risk

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Interest Rate Risk

the risk of capital losses to which investors are exposed because of changing interest rates.

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Maturity Risk Premium (MRP)

a premium that reflects interest rate risk.

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Reinvestment Rate Risk

the risk that a decline in interest rate will lead to lower income when bonds mature and funds are reinvested.