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Tag Archives: credit

Interest Rate Risk

Thursday, November 19, 2009

The price of a bond changes as interest rates change. Specifically, price moves in the opposite direction to the change in interest rates. That is, if interest rates increase, the price of a bond will decline; if interest rates decrease, the price of a bond will increase. This is the reason a bond will sell [...]

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Credit risk

Friday, November 13, 2009

Credit risk is the risk that a counterparty that owes, or potentially owes, a bank money fails to meet its obligations. For most commercial banks this is the most important risk to manage and price. A triple-A US company, such as General Electric, has very different risk characteristics than a small manufacturing company in an [...]

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