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Financial risk

2.3 Interest rate risk

Interest rate risk is the risk of gains or  Floating rate loans/investments
losses on assets and liabilities due to
changes in interest rates.  Fixed rate loans/investments
 Refinancing

See Chapter 13 for management.

2.4 Currency risk

Currency risk is the risk that arises from  Translation risk
possible future movements in an
exchange rate.  Transaction risk

 Economic risk

See Chapter 12 for management of transaction risk.

Illustrations and further practice

Now try TYU 1, 2, 3 and 6 from Chapter 11

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