Interest-Rate Risk
Short definition
Interest-rate risk is a market or policy rate move disturbing cash interest, asset value or refinancing price. Floating loans, the maturity wall and the duration gap are three separate channels.
Detailed explanation
Repricing (reset), curve risk (tenor structure), basis (TLREF versus the loan formula) and option risk (prepayment). Commercial loan rates do not track the policy rate one-for-one; bank funding and credit standards take a share.
Long fixed debt can cut cash risk and raise economic-value risk. An IRS changes the cash profile and adds margin.
Why it matters for the CFO
In a rate shock the DSCR denominator inflates. Kd in WACC moves with the same shock; the investment hurdle rises quietly.
How to read it
The shock is not a parallel +bp: the short end carries policy, the long end sovereign risk and expectations. Split the scenario into policy + credit margin + basis.
Related calculators
Güven Sayılgan’s writing on this topic
Explanatory Notes on Interest Rate Concepts
Please click to access the document on various interest rate concepts ( interest rates ). The document addresses the questions listed on this page.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.