Interest rate risks

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Interest rate risks

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Interest rate risk management should be at the top for all businesses. It is really important to include interest risk management in your banks and other businesses to keep the decision making always focused in all the strategic planning. First step is measuring the long term earning risks within the organization in order to determine the risk exposure which may occur in the future. Measuring the long term risks may give out an insight of any mismatches on the budget. There are also assumptions which are made by the managers which guide. The specific organizational assumptions stimulate non-expected results of the organization. There are also terminal assumptions in an organization which are responsible to assigning maturity to those non-maturity accounts. It is therefore important for organizations to make strong assumptions which will enable them hold the interest rate risks. Strategy management is another step which is mostly used by the bank managers to ensure that the decisions made are effective to the organization. It is important for managers to hold strategic planning session to discuss the interest risk rate management in an organization (Belongia, 2007).

Conclusively, mastering the asset location needs the assessment of the age and how it relates to the risk tolerance. In the middle age, it is said that the investors can really hit their target. Many investors feel comfortable handling the middle age although many are college tuitions. This is because of the bond that is provided by the middle age during the investment. It is important to take interest rate before the age of 40s as an investor. Economic status plays an important role in interest rate risk whereby if the economy varies it really builds a risk factor. Securities are affected if the economic status changes although different investors take risk differently. Economic status also affects the market risk whereby the market might be prevailing affecting the tolerance of interest rate of the investors (Belongia, 2007).

References

Belongia, M. T. (2007). Predicting interest rates: a comparison of professional and market-based forecasts. Review.




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