Interest rate risk is the risk that an investment's value might decline because of a change in interest rates. Interest rate risk is different from other risks such as credit risk, liquidity risk, and market price volatility. It is also different from inflation risk which is a concern that the value of money will decrease because of inflation.
Interest rate risk refers to the risk that a borrower will not be able to repay their loan in full. Interest rate risk is an important factor that must be taken into consideration when making financial decisions. It is also one of the most important factors in determining whether or not a debt is sustainable.
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