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Interest Rate Risk: A Critical Threat to Financial Stability
Interest Rate Risk: A Critical Threat to Financial Stability
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BTCCSquare news:
Interest Rate Risk (IRR) remains a pervasive challenge for financial institutions and Leveraged corporations, capable of eroding earnings and destabilizing capital structures. The inverse relationship between rates and bond prices amplifies vulnerability, particularly for long-duration assets. Without robust mitigation strategies, IRR can escalate from a manageable exposure to a systemic threat.
Financial fortresses are built on stress-tested defenses against rate shocks. The calculus is simple: when market rates rise, fixed-income securities fall. Duration metrics reveal the fault lines—longer maturities magnify the damage. This isn't confined to investment portfolios; balance sheets across the ecosystem shudder under rate volatility.
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