Glossary

Interest rate risk

The risk that the price of a fixed-rate bond falls because market interest rates rise.

Comparison A 3% bond rises to about 1,082 when rates fall to 2% and falls to about 925 when they rise to 4%. Rates fall to 2% 3% bond worth ≈ 1,082 Rates rise to 4% 3% bond worth ≈ 925

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