Interest Rate Risk

Interest Rate Risk With the rise and fall of interest rates, announced by the Reserve Bank of India from time to time, the fortunes of the bond and stock markets are closely tied. Fixed rate debt instruments fall in value as the interest rate rises, and vice versa. Highly leveraged companies suffer if the interest rate rises, and vice versa. Highly leveraged companies suffer if the interest rate rises, as they have to pay more for their borrowing. This reduces their profitability

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