Interest rate risk is the risk that results from the impact that changes in interest rates have on asset values.

Question

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Interest rate risk refers to the possibility of a decline in the value of an investment or asset due to an increase in interest rates. This can affect a wide range of investments, including bonds, stocks, commodities, and real estate, among others. Fluctuations in interest rates can significantly impact the returns investors receive on these assets, leading to potential losses or gains depending on the direction of interest rate movements. As a result, it is important for investors to understand interest rate risk and consider ways to manage or mitigate its effects on their portfolios.

Interest Rate Risk Is the Risk That Results from the Impact